Budget 2013 Update

After the announcement of Budget 2013 by Treasury Chancellor George Osborne on 20 March, we summarise the key points in the Budget: 

• An increased income tax allowance from £9,440 in 2013 to £10,000 from April 2014, an increase which is one year earlier than expected. Basic and higher rates of income tax stay the same, which are 20% and 40% respectively. The Chancellor maintained his decision to cut the top rate of tax on pay over £150,000 from 50% to 45% from April 2013. The following table shows the comparison of income tax allowance, tax rate limit and the threshold between 2012 and 2015.

Year	2012/2013	2013/14	2014/2015
Personal allowance	£8,105	£9,440	£10,000
Basic rate of tax limit	£34,370	£32,010	£31,865
Higher rate of tax threshold	£42,475	£41,450	£41,865

• From April 2013 anyone wanting to buy a new-build property will be able to access a 20% government loan as long as they have a 5% deposit. The Government will support people who can put down a 5% deposit to buy a home through two schemes to increase the supply of low-deposit mortgages and new housing. These two schemes are a Help to Buy- equity loan and a Help to Buy- mortgage guarantee.  Each scheme will help you to purchase a home valued up to £600,000.
  
• A pledge to cut the main rate of corporation tax from 24% in 2013 down to 21% in 2014, then down to 20% from April 2015. The cut to 20% is the third in a row by George Osborne, with the rate dropping from 28% to 24% in April 2013, and from 24% to 21% in 2014. The reductions in the main corporation tax rate are part of a co-ordinated strategy to improve UK tax competitiveness in the EU and make UK more open for business.

• Around 450,000 small businesses will pay no Employer National Insurance Contributions from next year after the introduction of a new Employment Allowance. This employment allowance will remove the first £2,000 off the employers' national insurance contribution on the small businesses. A person who has set up their own business, and is thinking about taking on their first employee will benefit from this allowance. They can hire someone on £22,400 per annum, or four people on the minimum wage, and pay no employment tax from next year.