Personal Tax

The Autumn Statement contained a number of measures concerning personal taxes.

Income tax

In the 2012 Budget it was announced that the tax-free personal allowance for 2013/14 would rise to £9,205. In the Autumn Statement this was increased by an extra £235 to £9,440. Equal gains from this increase will be passed on to higher rate taxpayers who receive a personal allowance.

The basic rate limit for income tax will be adjusted such that the higher rate threshold above which individuals pay income tax at 40% increases by 1% in 2014/15 and 2015/16. For 2013/14, the higher rate threshold will be £32,010, decreasing from the current £34,370.

It was confirmed that all previously unlimited income tax reliefs will be capped at the greater of £50,000 or 25% of an individual’s income. Charitable reliefs will be exempt from this cap.

National insurance contributions

For 2013/14, there are no changes to the percentage rate of contribution for Class 1 and Class 4 national insurance contributions (NICs). The upper earnings limit and upper profits limit for NICs will increase to stay in line with the higher rate income tax threshold and there are changes to all of the other thresholds and limits.

Capital gains tax (CGT)

The annual increase in the annual exempt amount for CGT will be 1% for 2014/15 and 1% for 2015/16, reaching £11,100.

Employee shareholder status

In October the Government introduced a new employee shareholder status. Employee shareholders will have different employee rights to other employees and will receive a minimum of £2,000 of shares. Legislation will be introduced to exempt gains on up to £50,000 of shares acquired by employees taking up the new employee shareholder status from CGT from April 2013.

The Government is also considering ways to reduce income tax and NIC liabilities that arise when employee shareholders receive the shares, including an option to deem that employee shareholders have paid £2,000 for shares they receive. This option would mean that the first £2,000 of shares received under the new status would be free from income tax and NICs.

Inheritance tax

The inheritance tax nil rate band will rise by 1% in 2015/16 to £329,000.

Child Trust Fund (CTF)

The CTF subscription limit will increase from £3,600 to £3,720 from April 2013.

Benefits and tax credits

Most working age benefits will be uprated by just 1% for three years from April 2013. This excludes the disability, carers and pensioners premia in these benefits and the support component in Employment and Support Allowance, which will continue to be uprated by prices.

Uprating by 1% will also extend to the Child Tax Credit and Working Tax Credit (excluding disability elements). The couple, lone parent and child elements will be uprated by 1% for three years from April 2013. The basic and 30 hour elements will not be uprated in 2013/14 but will be uprated by 1% in 2014/15 and 2015/16. All disability elements will continue to be uprated by prices each year.

Child Benefit will be frozen for 2013/14 at £20.30 per week for the first child and £13.40 for additional children, but will be uprated by 1% for two years from April 2014. Guardian’s Allowance will increase from £15.55 per week in 2012/13 to £15.90 per week in 2013/14.

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