Budget 2014 – Tax proposals for employers and businesses

The Budget delivered on 19 March 2014 updated some previous announcements but also provided a few surprises. Below are some of the issues that are likely to impact you, your family or your business:

EMPLOYEES
1. Beneficial Loans
From 6 April 2014 an employer may provide an employee with a cheap or interest free loan up to a limit of £10,000 (previously £5,000) at any time in the tax year without generating a taxable benefit on the employee. The exemption only applies if the total loan does not exceed the limit at any time in the tax year.

2. Company Cars
From 6 April 2014 the percentage applied to each band goes up by 1%, with a maximum charge of 35% of the list price of the car
From 6 April 2015 the percentage applied to each band goes up by another 2%, with a maximum charge of 37% of the list price of the car.

EMPLOYERS
3. Employment Allowance
From 6 April 2014 employers may claim an employment allowance of up to £2,000 per year which they can offset against their employer Class 1 National Insurance Contributions; there are some exceptions. The claim will be made via the employer’s payroll system.

LIMITED COMPANIES
4. Corporation Tax Rates
From 1 April 2014 the main corporation tax rate will be 21% (previously 23%)
From 1 April 2015 the main corporation tax rate will be 20%

The small profits corporation tax rate remains at 20%.

5. Annual Investment Allowance
The Annual Investment Allowance (AIA) provides a business with 100% tax relief on their expenditure on plant and machinery up to an annual limit. Any expenditure above the annual limit attracts an annual written down allowance at 18% or 8% depending on the type of asset.

From 1 April 2014 (for companies) or 6 April 2014 (for unincorporated businesses) to 31 December 2015 the annual limit has been increased to £500,000 (previously the AIA was £250,000 for the period 1 January 2013 to 31 December 2014).

6. Research and Development (R&D) Relief
If companies incur expenditure on R&D projects with the aim of scientific or technological advances they may be able to claim additional tax relief in the form of R&D relief.
From 1 April 2014 the rate of the R&D payable tax credit will be increased to 14.5% (from 11%).

If you have any questions please do not hesitate to contact us by phone on 0333 577 0135 or at info@tracynewman.co.uk

Look out for our next blog – Budget 2014 – Tax proposals for individuals

Disclaimer: The above summary of select tax proposals is for the information of our clients only.  No action should be taken without first obtaining professional advice.

 

 

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