The Chancellor stated several times his aim for this to be a Budget for people who "aspire to work hard and get on." Several measures are being introduced to support this aim:

  • The introduction of a £10,000 personal allowance from 6 April 2014, reducing tax bills for 24 million taxpayers by £200 and taking 2 million people out of the tax system altogether. The Government had previously announced an ambition to introduce a £10,000 personal allowance by the end of the current Parliament in 2015, so it is good to see this accelerated by 12 months.
  • The tax free limit that employers can provide tax free loans to Loans for employees has been doubled from £5,000 to £10,000. The limit had been £5,000 for many years so this is good news for employees who receive tax free loans from their employers for things like season tickets. For those increasingly travelling significant distances to their place of work and paying more than £5,000 for their season tickets, this will be a welcome change.
  • The Capital Gains Tax re-investment relief under the Seed Enterprise Investment Scheme ("SEIS") which was introduced from 6 April 2012 was due to end on 5 April 2013. It has now extended such that 50% the amount invested in SEIS qualifying businesses can be used to offset gains arising in 2013/14 or 2014/15. This isn't quite the tax holiday that it was portrayed to be in the Chancellor's speech today as the existing CGT relief actually provides for 100% of the amount invested to qualify for the re-investment relief.
  • A new capital gains tax exemption is to be introduced from 6 April 2014 on a qualifying disposal of a controlling interest in employee owned structures.

Not surprisingly to help fund these changes a new package of measures is to be introduced to combat aggressive avoidance and abusive tax planning. The UK has agreed measures with the Isle of Man, Guernsey and Jersey Governments to clamp down on those who hold undeclared money offshore.

The package consists of:

  • An agreement to automatically exchange financial information on UK taxpayers with accounts in the Isle of Man, Guernsey and Jersey .
  • A disclosure facility to allow people to disclose their previous tax affairs in advance of the information being automatically exchanged. This will most likely operate along the same lines as the Liechtenstein Disclosure Facility which has been in operation since 2009.

Also on tax avoidance, we can expect to see organisations promoting aggressive tax planning schemes and arrangements named and shamed in future!

With regard to Inheritance Tax, there will be a consultation on simplifying the calculation of the 10 year and exit charges on trusts. The simplified measures are expected to take effect from 6 April 2014. The calculation of these charges is notoriously complex and this measure will be keenly received by trustees and those advising them.

The IHT nil rate band is to be frozen at £325,000. The IHT exemption for transfers from UK domiciled spouses to non-UK domiciled spouses is to be increased to £325,000 (it is currently £55,000). A new measure to enable a non-domiciled spouse or civil partner to elect to be treated as a UK domiciled spouse or civil partner will be introduced in the 2013 Finance Bill.

High Value Residential Properties (HVRP)

With regard to measures previously announced, it is confirmed that the new "Annual Residential Property Tax" ("ARPT") on the ownership of properties worth more than £2million owned via "Non-Natural Persons" (essentially companies) will proceed as planned from 1 April 2013. Interestingly the "ARPT" seems to have been renamed the "Annual Tax in Enveloped Dwellings" "ATED" which I suppose rolls off the tongue rather more easily!

On face of it a good budget for earners. And a cheaper pint of beer or two to celebrate!

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.