Following the latest budget, we’ve put together the most important changes you need to keep your eye on in 2014.
Annual Investment Allowance (AIA) increase
The AIA threshold is to double to £500,000 from 1st April 2014. This is set to revert back to £25,000 after 31st December 2015.
Extended Business Rates Relief
Up to £2.8billion has been set aside to carry on with small businesses rates relief from April 2014. This allows businesses up to £1,000 off bills on properties with a rateable value of less than £17,999.
VAT Registration
The compulsory turnover limit to register for VAT has now risen to £81,000.
Research & Development Tax Credits
The current relief of 11.5% will go up to 14.5% from 1st April 2014. This is an effective tax credit of nearly a third on spending which can be reclaimed as cash. It is extremely useful for businesses developing new technologies.
Employment Allowance
This is one of the sweeteners in this years budget for most businesses. From 6th April 2014, employers will be given an employment allowance of £2,000, which can be set against employers’ national insurance contributions.
This means you can pay a single employee about £20,000 without making an employer contribution. And it is estimated to take about 450,000 of the smallest employers completely out of the tax.
Company Cars
Car benefit rates are increasing again, making them less attractive to businesses and individuals.
EG a 145g/km CO2 car was 20% of the list price in 2012-13 will be 28% by April 2017. This increase in tax is shown below –
| 2012-13 | 2017-18 | |
| List price | £25,000 | £25,000 |
| Taxable benefit | £5,000 | £7,000 |
| 20% tax payer | £1,000 | £1,400 |
| 40% tax payer | £2,000 | £2,800 |
Also electric cars will start to incur a taxable benefit from 0% to 5% on list price from April 2015.
Simplifying Taxes
Class 2 national insurance is currently billed to the self-employed on a 6 monthly basis. In future this is going to be collected through self-assessment.
Tax Avoidance Measures
Firms and individuals who have entered into disclosed tax avoidance schemes will now have to pay tax upfront and argue their case in court. If they win they will receive their money back with interest.
This is the opposite of how it works now where HMRC have to open an enquiry into the taxpayer, before being able to try and recover the money.
And for individuals –
Childcare help
From September 2015 working families will be able to claim up to £2,000 of tax relief per child. It will work by the government paying 20% of childcare costs on behalf of the family up to £10,000 of childcare costs per child.
ISA’s
The ISA limit is to rise on 1st July 2015 to £15,000, as any mix of cash and stocks. Investors will also be given the option to interchange between the two options at any point they wish.
We understand how important your business is to you. If you’d like to discuss any of the above with our Chorley accountants and see how we can help your business, don’t hesitate to book your meeting with us online! Or there’s also more analysis here.