Chancellor’s Autumn Statement:
How DNS will help you
The Chancellor delivered his autumn statement to parliament yesterday. What elements of it will affect you and your business, and how will DNS make it work for you?
The personal tax allowance will go up to £9,440 in April 2013. That’s £235 more than expected. The rise does include higher rate tax payers. How DNS can help: we will ensure you maximise this allowance and advise you so that your income stays as close to £9,440 as possible.
The 40% higher band tax rate threshold will increase by 1% in 2014 and 2015 from £41,450 to £41,865 and then £42,285. How will DNS help: we will endeavour to keep your salary below the 40% rate, ensuring you make use of all other allowances and benefits in order to do so.
Inheritance tax threshold will rise from £325,000 to £329,000 in 2015/16. How DNS can help: we can advise you on inheritance tax; keep us informed about future inheritance of, say, a parents’ house or the expectation of a large sum of money from an inheritance. Forward planning is always central to our tax planning strategies.
Fuel Duty, the three pence per litre rise in fuel duty was scrapped. At last, government seems to be listening. How DNS can help: there is a template to download from our website to record your mileage and plenty of advice available on our blog. Expenses and allowances are an area where we encourage careful record keeping and great diligence. We can apply for dispensation on your behalf which will mean that you can avoid reporting on expenses.
While on the subject of expenses, make a point of knowing the difference between tax efficiency and tax avoidance:
Prosecutions for tax evasion are up by 80% with 2,500 more tax inspectors specially trained to catch out would-be tax evaders. The government plans to close tax loopholes and simplify the current 15,000-pages of tax guidance. Incredibly, HMRC have not had their budget cut, but instead will have their budget increased by £77 million. How DNS can help: watch out; make sure your record keeping is scrupulous and that your corporation tax, income tax, PAYE, NI and VAT bills and everything else is paid on time. Make use of FINAC, the DNS online portal and read our blog about allowable expenses and IR35 "off payroll" legislation.
Lifetime pension relief allowance reduced with effect from 2014/15 from £1.5 to £1.25 million. Unfortunately, the annual tax-free allowance has also been reduced from £50,000 to £40,000. The basic state pension will rise by 2.5% in 2012 to £110.15 a week. How DNS can help: we can help you make the most of all your money: key to tax planning is future planning. It is tax efficient to pay part of your income into a pension fund.
ISA limit increased to £11,520 from next April. How DNS can help: there is no great return on an ISA but it is tax-free savings and you should take advantage of it.
Benefits and allowances Most benefits are to be cut with a 1% increase in real terms over the next three years. The government launches universal tax credits next year, which will affect working all state-funded benefit payments, such as child tax credits and working tax credit and Child Benefit. How DNS can help: please get in touch and make sure you are receiving all the benefits you are entitled to: including WCTC and nursery vouchers if you have children, and see how DNS can help you and your family stay below the Child Benefit threshold.
The main rate of corporation tax to be cut by 1% to 21% from April 2014. The small business rate tax relief doubling scheme will be extended to 2014. The chancellor announced £1 billion extra capital for the UK Business Bank. How DNS can help: This is good news to get a further 1% off corporation tax and it is positive to announce the extension of the small business rate tax relief. As for the extra money in the UK Business Bank pot, well, it can still be very difficult to raise capital. Take a look at our blog of April 2012 about the Seed Investment Enterprise scheme.
Looking at it, there was nothing to hurt small or medium size business, contractors or freelancers in terms of taxes, but the extra HMRC inspectors and the likelihood of investigation is a worry. Make sure you have tax investigation insurance and don’t take any risks with your IR35 status. Be diligent about compliancy.