Leonie Kerswill, Private Client Tax Partner, talks about the announcements we heard in the Budget and in particular their impact on individuals.
So how was the Budget for individuals?
Firstly the Chancellor confirmed that the personal allowance for people born after 5 April 1948 will be increased to £9,440 for 2013/14. He also announced that the rate will go up to £10,000 from 2014 – which is earlier than we thought.
As far as inheritance tax goes we heard that the nil rate band – which is the tax free amount everyone can leave on their death, will be frozen at £325,000 until April 2018. There was an interesting announcement regarding loans and when they can be deducted in working out the value of someone’s estate. Currently most loans can be taken off the value of the estate to arrive at the IHT value. From the date of Royal Assent – likely to be in July, this won’t be the case. We’re awaiting further detail but even if the loan is from a third party and is on fully commercial terms it won’t always be deductible.
Very little on capital gains tax today and what there was was mainly for employees. We got confirmation that gains on shares acquired through the ‘employee shareholder’ scheme will be exempt – as a quick reminder these are shares worth between £2,000 and £50,000 which employees can get free of income tax and national insurance contributions – the cost being loss of certain employment rights.
The reinvestment relief under the seed EIS provisions have been extended for another year – so good news for qualifying businesses looking to raise finance.
If you’re wondering what happened on pensions the answer is no further restrictions so the current annual allowance is £50,000 and as we expected this will fall to £40,000 from April 2014. The lifetime allowance will reduce from £1.5m to £1.25 m from the same date.
We heard a lot today about tackling anti avoidance and abuse, with some specific measures around partnerships and the intention to name and shame tax avoidance scheme promoters.
Jersey, Guernsey and the Isle of Man have all agreed to exchange information with HMRC to try and identify undeclared assets. All three islands have also announced a disclosure facility to encourage people who think they may have underpaid tax to put their affairs in order.
Finally some good news for beer drinkers, no increase in duty and a penny off a pint. My learned colleagues who know about these things tell me that works out as buy 300, get one free.
As ever the devil will be in the detail so we will let you know more once we see the draft legislation.
A number of measures were introduced by the Chancellor, notably the increase in personal allowance to £10k from 2014 - earlier than expected. Consistency was key with little change to Capital Gains Tax for individuals and no big announcements of pension changes.
We heard a lot today about tackling anti avoidance and abuse, with the introduction of a 'name and shame' scheme for promoters of certain arrangements. Jersey, Guernsey and the Isle of Man have all agreed to exchange information with HMRC to try and identify undeclared assets, and there will be a new disclosure facility to encourage people who think they may have underpaid tax to put their affairs in order.
And finally beer! With no increase in duty and a penny off a pint, I'm told that works out to roughly buy 300, get one free. So not all bad.
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