0. Budget briefing Friday 21 March 2014
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1. Disclaimer
This seminar is of a general nature and is not a substitute for professional advice. No responsibility can be accepted for the consequences of any action taken or refrained from as a result of what is said.
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2. Introduction The agenda for this morning: Introduction
Personal taxes, Pensions
Corporate taxes
Employment taxes
Q&A
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3. Introduction “A Budget for a resilient economy”
Pensions – radical shift
A Budget for entrepreneurs?
Anti-avoidance ….
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4. = Very little room for manoeuvre
Two major issues
Growth in economy
Public Finances (deficit > £100bn a year)
= Very little room for manoeuvre

5. Change in employment Change in employment (‘000)
Source: Financial Times: 2013

6. Export – Budget boost Additional funding to UKTI to assist companies
UK Export Finance
£3bn additional loans
One third reduction in interest rates

7. Economic Outlook
The UK economy is gaining traction and we don’t expect the recovery to relapse. Although growth will be modest by historic standards.
Monetary policy is likely to remain accommodative for the foreseeable future. Forward guidance has moved towards monitoring the quantum of ‘excess capacity’ in the economy.
Interest rate increase unlikely until nominal wage costs start to accelerate – latter half of 2015
Inflation now below the target level takes a lot of pressure off the MPC. Continued disinflation might even produce some real earnings growth.
Recovery has been ‘route one’ to date but there are encouraging signs that both net exports and capital expenditure will contribute to a re-balancing in 2014.

8. Anti-Avoidance Tax payments up front (DOTAS and GAAR)
Direct recovery of debts (>£1,000)
Specific provisions in all areas, including some relaxations
Retrospective measures, e.g. clarification on rollover provision

9. Personal Taxes & Pensions
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10. Budget Briefing Income Tax 2014/15 2015/16 Personal Allowance £10,000
£10,500
Basic rate band: 20%
£0 - £31,865
£0 - £31,785
Higher rate: 40%/32.5%
£31,866 - £150,000
£31,786 – £150,000
Additional rate: 45%/37.5%
Over £150,000
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11. ISA changes - NISA NISA Junior ISA
From 6/4/14 - 1/7/14 £11, Max 50% Cash
From 1/7/14 - 5/4/15 £15,000
Junior ISA
From 6/4/14 - 1/7/14 £3,840
From 1/7/14 - 5/4/15 £4,000
Can transfer existing equity ISAs to cash NISAs and vice versa

12. Other Investments Premium Bond Max Limit Pensioner Bonds £30,000 now
£40,000 from June
£50,000 from 2015/2016
Pensioner Bonds
2.8% 1 year fix
4% 3 year fix
Max £10,000 investment
Income Taxable
Available January 2015

13. Seed Enterprise Investment Scheme – SEIS
Sister of EIS
A quick resume
Income tax relief at 50% (and carry back)
Capital gains exemption and rollover for 50%
Relief £100,000 capped.
Gross assets < £200,000 and other conditions.
Targeted at small, early stage companies needing equity finance
Originally limited shelf life.
Now a permanent relief

14. Budget Briefing Capital Gains Tax “CGT” Inheritance Tax
2014/15 annual exemption £11,000
No rate changes
Principal private residence relief
From 6 April 2014, 36 months final period deemed occupation reduces to 18 months
Limited exceptions made
Inheritance Tax
£325,000 nil rate band frozen until 2017/18. Indexed in accordance with CPI thereafter

15. Partnerships Budget announcements Previously announced changes
Class 2 NICs to be collected via self-assessment
PAYE to be introduced for salaried members
Previously announced changes
Salaried members of LLPs
Mixed partnerships
‘Tax-motivated’ disposals of assets
Partnerships been in the spotlight for the past year
- Budget 2013
- Draft FB 2014 legislation published for consultation in December for Autumn Statement
- Consultation closed on 4 February 2014
- Revised guidance on 21 February and on 7 March
Previously announced changes
- Salaried members of LLPs – to treat salaried members as employees
- Mixed partnerships – HMRC to re-allocate losses or profits where there are corporate members
- ‘Tax-motivated’ disposals of assets
Lots of detail presented on this previously – do not intend to go into further detail now.
Carry on film – carry on don’t lose your head. (reference to those dealing with / affected by these changes to keep calm) - Image to come
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16. Property Enveloped dwellings
Previously UK residential property >£2m. Now >£500k.
15% on purchase (20 March 2014)
£7k on property £1m to £2m (1 April 2015)
£3.5k on property £500k to £1m (1 April 2016)
28% on ATED-related gains in line with ATED extension
An estimated 8,000 corporate businesses that buy or hold residential properties worth over £500k will be able to claim relief – but still have to file a return and claim the relief.
ATED raised 3 to 5 times the amount forecast
Due to people accepting cost of structure for anonymity and IHT cover (similar to wealth taxes overseas)
Might have expected increase in rates?
- so is this revenue raising exercise understandable and likely to have similar results?
International investors might be more affected – e.g. ‘000s of new build flats in Battersea – Nine Elms development. May still benefit from exemption if rented to 3rd party.
How to tie in with the consultation to extend with CGT to non-residents? Remains to be seen. However, if de-enveloping is being considered, consider well in advance of April 2015.
Carry on film – carry on camping. (reference to thresholds going so low for enveloped dwellings) - Image to come
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17. Budget Briefing Non-residents
Consultation to charge CGT on future gains of UK residential property from April 2015
Review of availability of personal allowance

18. Current pension deadlines
Lifetime allowance reduction from £1.5m to £1.25m from 6th April 2014
Fixed protection – stop contributions
Individual protection – continue contributions
Annual allowance
Reducing from £50,000 to £40,000
Pension years not tax years
Voluntary NICs
Pension flexibility increased – but for how long?

19. Corporate Taxes
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20. Budget 2014 Corporation Tax rates Capital allowances
Research & Development relief
Anti-Avoidance
Share Reporting
VAT

21. Corporation Tax Rates FY 2014 21% FY 2015 20%
Small Companies Rates 20%
Don’t forget
Patent box rate %

22. Associated companies
Limited impact due to unified CT rate of 20% from 1 April
Simplified rules relevant to patent box and capital allowances regimes

23. Capital allowances Annual Investment allowance
doubled to £500,000 from 1 April 2014
extended to 31 December 2015
Enhanced Capital allowances
revisions to qualifying list
qualifying capital expenditure in designated enterprise zones extended to 31 March 2020
Mineral extraction planning costs
annual writing down allowance increased from 10% to 25% (after Royal Assent of Finance Bill 2014)

24. Research & Development Relief Payable credit to loss-makers
The Relief
Enhanced deduction 225%
Cash in Rate 11%
Effective rate %
FY 2014
Cash in rate %
Effective rate %
SME’s only
< 500 employees
Turnover < €100m
Balance sheet < €86m

25. Creative sector tax breaks
Theatre productions from 1 September 2014
25% for qualifying touring productions
20% for other qualifying productions
Extension of film tax reliefs
film tax credit for surrenderable losses
25% on first £20m of qualifying production expenditure
20% thereafter
minimum UK expenditure qualification reduced from 25% to 10%
Video games tax relief and high-end television tax relief
extension of video games tax relief to goods and services provided from within EEA
cap on subcontracting of £1m per game
(above subject to state aid clearance)

26. Loan relationship and derivative contract legislation
Changes to the group continuity rules
to counter avoidance re: intra group transfers of loans and derivative contracts
company leaving a group on or after 1 April 2014 (within six years of transfer) required to bring in to account both credits and debits

27. Share reporting Online services
Register all share option schemes from April 2014
File EMI1s electronically from April 2014
EMI40, Form 42 etc. file online from April 2015

28. VAT VAT registration limit raised from £79,000 to £81,000
Deregistration limits raised from £77,000 to £79,000
effective 1 April 2014
Removal of “prompt payment discount’ VAT calculation
1 May 2014 (telecommunications and broadcasting supplies)
1 April 2014 (all other supplies)
Reverse charge for wholesale transactions in gas and power
B2C supplies of telecommunications, broadcasting and e- services to be taxed in country of consumption
Mini one-stop shop (MOSS) will allow single EU VAT registration
Effective 1 January 2015

29. Employment Tax Update
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30. Content Tax and NI rates Payroll Benefits in kind Anti-avoidance
Tax Simplification

31. 2014/15 Tax and NI rates Personal allowances £10,000 (1000L)
NI (employer’s and employee’s) aligned at £153 pw
NI rates remain unchanged

32. Payroll Employment allowance – claim up to £2,000
SSP Percentage Threshold Scheme abolished
RTI dashboard – check your PAYE payments
RTI interest and penalties
interest from April 2014
automatic late filing penalty from October 2014
automatic late payment penalty from April 2015
Digital service for employees to amend benefits
P46 replaced by starter checklist

33. Vehicles from 6 April 2014 Car benefit starts at 5% for 1 – 75g/km
Van benefit increases from £3,000 to £3,090
Car fuel benefit multiplier increases from £21,100 to £21,700
Van fuel benefit increases from £564 to £581

34. Vehicles from 6 April 2014
Payment for private use of a company car/van in the relevant tax year
Where an employer leases a car to an employee, the benefit is taxed as a car benefit rather than as employment earnings

35. Other Benefits from 6 April 2014
Employer funded occupational health treatments
£500 tax exemption for medical treatments
Childcare vouchers and childcare allowance
Beneficial loans
small loan exemption limit increased to £10,000
average official rate down to 3.25% for 2014/15

36. From 6 April 2015 onwards
Minor changes to company car and fuel benefit calculations (bands and multipliers)
From 6 April max CO2% = 37%
April % diesel supplement abolished
Reduced van benefit charge for zero emission vans (starting with 20% of the standard charge for 2015/16 increasing on a sliding scale back to the full charge in 2020/21)

37. Anti-avoidance Offshore intermediary companies
Onshore employment intermediaries
Dual contracts

38. Tax Simplification Government consultation
payrolling benefits
general exemption for non-taxable expenses
abolition of the £8,500 threshold
trivial benefits exemption
Government to review the rules on travel and subsistence expenses
Government to consult on CIS Summer 2014

39. Questions & Answers
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