It has been generally acknowledged that the Budget was a little underwhelming or a damp squib, there was very little for the SME market and actually most of the changes had already been released. These were
For individuals
The main change was the increase in the personal allowance from £8,105 to £9,440 taking more low and part time employees out of tax altogether and going towards the coalition aim of £10k tax free for all which was confirmed in the Budget. While the tax allowance increases to £9.4k the level at which NI is levied on employees and employers is only £7,748 and £7,696 respectively and for directors the suggested pay level is £640pm which is just below the threshold. Some of this saving has been funded by a reduction in the level at which higher rate tax is levied reducing from £35k in 2011/12 to £32k in 2013/14, a reduction of £3k when personal allowances have increased by only £1,965. It is now even more important that basic rate tax bands are fully utilised.
Businesses
- The main corporation tax rate is 23% for 2013/14, ahead of the reduction to 20% announced in the Budget.
- The most substantial change was to capital allowances where the Annual Investment Allowance has been increased to £100kpa from January 2013 for 2 years.
- The CO2 limit for capital allowances on cars has also been reduced so cars with CO2 greater than 130g/km only receive the 8% reduced from 160g/km previously.
- VAT registration limit increases by £2k to £79,000
The Budget is no longer awaited with baited breath as there is so little in the way of current announcements however there may still be areas to consider so please seek professional advice before taking any steps based on the information shown. If you would like advice in this or other areas feel free to call. Alastair Wood, AW Accounting, Gravesend, Kent – Accountants who “speak your language”