Following changes announced in Budget 2012, here are the main tax changes, rates and allowances for the 2012/13 tax year.
If you are looking for figures for the 2014/15 tax year, you will find them in ByteStart’s guide to the tax rates, allowances and thresholds of relevance to small business owners for the 2014/15 tax year.
The rate paid by smaller companies (with profits of up to £300,000) is 20%
The main rate paid by larger companies (with profits of £1.5m or more) has been cut from 26% to 24%, and will fall to 23% in 2013/14 and 22% in 2014/15.
The value of the personal allowance has risen to £8,105 (2012/13).
The personal allowance will rise by £1,100 to £9,205 from April 2013.
Income Tax Bands
Basic Rate (20%) on income up to £34,370.
Higher Rate (40%) on income between £34,371 and £150,000.
Additional Rate (50%) on income over £150,000.
From April 2013, the Additional Rate will be cut from 50% to 45%.
Tax on Dividends
There are no changes to the dividend tax rates, which are:
Basic Rate (10%) on dividend income up to £34,370.
Higher Rate (32.5%) on dividend income between £34,371 and £150,000
Additional Rate (42.5%) on dividend income over £150,000.
VAT (Value Added Tax)
The threshold for when you must register for VAT is £77,000 (from April 2012), and the deregistration threshold is £75,000.
The standard rate remains at 20%
National Insurance Contributions
Class 1 Employers NICs are 13.8% on weekly earnings over £144.
Class 1 Employees NICs are charged at 12% on weekly income between £146.01 and £817 per week, and 2% on earnings above this threshold.
Class 2 NICs are £2.65 per week (up from £2.50 in 2011/12)
Class 4 NICs are charged on annual profits between £7,605 and £42,475, and 2% on amounts above this threshold.
Tax Relief on Pension Contributions – Limits
The annual allowance is £50,000 (same as 2011/12).
However, the ‘lifetime allowance’ has been reduced to £1.5m from April 2012.
CGT (Capital Gains Tax)
The CGT rates remain 18% and 28% (for basic rate and higher rate taxholders respectively).
For disposals which qualify for Entrepreneurs Relief, the lifetime limit is £10m.
IHT (Inheritance Tax)
The threshold before IHT is payable remains at £325,000. Thereafter, all proceeds are taxed at 40%.
There is a new 36% IHT rate from April 2012 which applies when 10% or more of the net estate is given to charity.
ISAs (Individual Savings Accounts)
The maximum annual savings limit is £11,280, or which £5,640 can be saved in cash.
SDLT (Stamp Duty Land Tax)
Rates remain unchanged from last year, with the exception of a new 7% rate introduced in Budget 2012.
0% rate – on purchase prices up to £125,000
1% rate – £125,001 – £250,000
3% rate – £250,001 – £500,000
4% rate – £500,001 – £1m
5% rate – £1,000,001 – £2m
7% rate – £2m +
Corporation Tax allowances and reliefs
Controversially, the Annual Investment Allowance has been cut to a mere £25,000 in the 2012/13 tax year (previously it was £100,000).
First year allowances remain at 100%.
The plant & machinery main rate has been cut to 18% (from 20%).
The plant & machinery special rate has been cut to 8% (from 10%).
The allowance for R&D tax credits for SMEs is 225%.
The England standard multiplier is 45.8p: the small business multiplier is 45p.