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Tax Numbers for 2013/14

Newsletter issue - December 2012.

The main tax rates, thresholds and allowances as they have been announced in the Autumn Statement and subsequent releases for the tax year 2013/14 are summarised below.

Income Tax

Personal allowances £
Born on or after 5 April 1948 9,440
Born between 6 April 1948 and 5 April 1938 10,500
Born on or before 6 April 1938 10,660
Minimum marriage allowance 3,040
Maximum marriage allowance 7,915
Blind person's allowance 2,160
Income limit for age allowances 26,100
Income limit for all personal allowances 100,000

The level of personal allowance is now tied to the taxpayers' year of birth, not to his or her age in the current tax year. The marriage allowance is only available to taxpayers born before 6 April 1935, and is given as reduction in tax at 10% of the allowance value.

Income tax rates Dividends Other income Band £
Savings rate* 10% 10% 0 to 2,790
Basic rate 10% 20% 0 to 32,010
Higher rate 32.5% 40% 32,011 to 150,000
Additional rate 37.5% 45% Over 150,000

* Not available if non-savings income exceeds the savings rate threshold.

National Insurance

Class: Weekly earnings Rate
Employer's class 1 above primary threshold Above £148 13.8%
Employee's class 1 not contracted out From £149 to £797 12%
Employee's additional class 1 Above £797 2%
Married woman's rate* From £149 to £797 5.85%
Self-employed class 2 - £2.70
Share fishermen class 2 - £3.35
Volunteer development workers class 2 - £5.45
Class 3 - £13.55
Annual profit thresholds
Small earnings exemption class 2 £5,725 -
Self-employed class 4 From £7,755 to £41,450 9%
Self-employed class 4 additional rate Above £41,450 2%

*only available for women who made a valid married woman's election before 11 May 1977.

Company Cars and Vans

The tax charge for the private use of a company car is based on a percentage of the list price of that car when new, as read-off the table of the vehicle's CO2 emissions.

For 2013/14 and 2014/15 a 5% list price band applies to cars with CO2 emission not exceeding 75g/km.

In 2013/14 the 10% list price band applies to cars with emissions of 76-94g/km, and one percentage point is added for every 5g/km of CO2 emissions, but in 2014/15 the 11% of list price will apply to these 'entry level' cars. From 6 April 2015 the lowest percentage of list price will be 13%, and from 2016 the minimum percentage of list price increases to 15%.

Fuel benefit

Where a company car driver receives free fuel, the taxable benefit is calculated as the percentage of the list price for the car applied to a set value, currently £20,200. This will rise to £21,100 from 6 April 2013. The taxable benefit when fuel is provided for private use in a company van will increase to £564 for 2013/14.

Capital Gains Tax

Tax rates Individuals Trusts
Up to basic rate band 18% 28%
Above basic rate band 28% 28%
Annual exemption 2013/14* £10,900 £5,450
Annual exemption 2014/15 £11,000 £5,500
Annual exemption 2015/16 £11,100 £5,550

* Not confirmed.

Tax Credits

Working tax credit £ per year
Basic element 1,920
Couple and lone parent element 1,970
30 hour element 790
Disabled worker element 2,855
Severe disability element 1,220
Child tax credit
Family element 545
Child element 2,720
Disabled child element 3,015
Severely disabled child element 1,220
Income thresholds and withdrawal rates
Income threshold 6,420
First threshold for child tax credit 15,910
Income rise disregard 5,000
Income fall disregard 2,500
Withdrawal rate 41%

All of the above figures are frozen at the 2012/13 rates (which were also frozen at 2011/12 rates), except for the disabled and childcare elements. The amount of childcare cost that can be claimed as a deduction is capped at £175 per week for one child or £300 per week for two or more children, and up to 70% of the child care costs can be covered.

Tax credits will be replaced by Universal Credits for new claimants from October 2013. Existing tax credit claimants will be gradually moved to the new system over four years.

ISAs

Savings made by: Overall limit Cash up to: Balance in stocks and shares up to:
Adults over 18 £11,520 £5,760 £11,520
Aged 16 & 17 £5,760 £5,760 -
Under 18 in Junior ISA £3,720 £3,720 £3,720
Child trust fund limit £3,720 £3,720 £3,720

Pensions

In spite of much speculation about a reduction in tax relief for contributions to registered pension schemes, there has been no change in the tax relief rates or annual allowance for 2013/14.

Each individual has a personal annual allowance of £50,000 (for 2013/14), which is expanded by any unused annual allowance brought forward from the previous three tax years. If the value of the pension contributions deemed to be made (by both employee and employer), exceed the taxpayer's available annual allowance, an annual allowance tax charge applies on the excess contributions, set at the taxpayer's highest rate of income tax.

The lifetime allowance is the maximum value of the pension savings from which a tax free lump sum can be taken on retirement. If the lifetime allowance is exceeded when the taxpayer starts take their pension benefits, part of those pension benefits are subject to a lifetime allowance charge. As the lifetime allowance is to be reduced from 6 April 2014, affected taxpayers can elect to fix protection on their current pension pots which already exceed £1.25 million.

Tax year: 2013/14 2014/15
Annual allowance £50,000 £40,000
Lifetime Allowance £1,500,000 £1,250,000

Inheritance Tax

The value of a person's estate that is free of inheritance tax is called the nil rate band. This has been frozen for five years to 2015.

Deaths in tax year: 2013/14 2014/15 2015/16
Nil rate band £325,000 £325,000 £329,000

Corporation Tax

Taxable profits From 1 April 2013 1 April 2014
£0 - £300,000 20% 20%*
£300,000 - £1,500,000 25% TBA*
£1,500,000 and over 23% 21%

* to be confirmed at Budget 2013

Capital Allowances

The Annual Investment Allowance (AIA) has been increased to £250,000 but only for qualifying expenditure incurred in the two years from 1 January 2013. Where the accounting period straddles 1 January 2013 the AIA is restricted to the relevant proportion of the AIA cap in place for periods before and after 1 January. Great care must be taken to ensure that the expenditure falls in the correct period to use the AIA cap available.

Period: 1 April 2011 to 31 March 2012 1 April 2012 to 31 December 2012 1 January 2013 to 31 December 2014
Main pool: writing down allowance 20% 18% 18%
Special rate pool: writing down allowance 10% 8% 8%
Annual Investment Allowance (AIA) cap: £100,000 £25,000 £250,000

Annual Residential Property Tax

This is a new tax which will apply to residential properties in the UK valued at £2 million or more, which are owned by:

  • a company,
  • other corporate body,
  • collective investment vehicle such as a unit trust; or
  • a partnership which includes one or more of the above as a member.

There will be exemptions for properties which are not dwellings (such as boarding schools, hospitals), are used for business or charitable purposes or are open to the public.

The tax will be charged at the following rates for 2013/14 with the first payment due by 31 October 2013.

Property Value Annual Tax
£2 million to £5 million £15,000
£5 million to £10 million £35,000
£10 million to £20 million £70,000
£20 million and over £140,000