£9,440. We are already aware that the government are keen to hit their £10,000 target and this now looks even more likely to be introduced in 2014. However, the CIPP also recognises that this additional change will bring a burden to payroll software providers to implement. There was no mention of any change to the additional rate of income tax and as HMRC tables still show a reduction to 45% for those earning over £150,000, we can assume that this change will remain in place for 2013.
Pensions Savings - Tax Relief For tax year 2014-15 onwards:
the annual allowance for pensions tax relieved savings will be reduced from £50,000 to £40,000 the standard lifetime allowance for pensions tax relieved savings will be reduced from £1.5 million to £1.25 million a transitional 'fixed protection' regime will be introduced for those who believe they may be affected by the reduction in the lifetime allowance.
Legislation will be introduced in the Finance Bill 2013 to make these changes and will be published in draft on 11 December 2012.
The government also announced that they will discuss with interested parties whether to offer a personalised protection regime in addition to a fixed protection regime.
Pensions Restriction of pensions tax relief-Overview Note
CIPP Comment As widely speculated the tax relief savings for pensions is to change in 2014 with the Annual Allowance being reduced from £50,000 to £40,000. There will, as previously announced, remain in place a fixed protection regime for the lifetime allowance which has the potential to keep pension providers busy with the likely 1% of the population affected. The CIPP policy team will of course be publishing the draft Finance Bill 2013 next week, which will contain the full detail of these changes. Business Tax In addition to the 2012 Budget announcement, the main Corporation Tax (CT) rate for Financial Year 2014 will be reduced by a further 1% to 21%. As already announced, the main CT rate for Financial Year 2013 is 23% and the Small Profit rate is 20%. The Annual Investment Allowance will be increased from £25,000 to £250,000 per annum for a 2 year period commencing from 1 January 2013. A simpler income tax scheme for small unincorporated businesses will be introduced for the tax year 2013-14 to allow: o Eligible self-employed individuals and partnerships to calculate their profits on the basis of the cash that passes through their business. They will generally not have to distinguish between revenue and capital expenditure o All unincorporated businesses will be able choose to deduct certain expenses on a flat rate basis CIPP Comment The CIPP is encouraged that the chancellor is still able to support businesses by reducing, yet again, the corporation tax by another 1% from 2014. We expect that businesses will welcome yet another unprecedented increase in the Annual Investment Allowance of ten times the current amount. And any income tax scheme that is simplified is of course welcomed; however the detail of
CIPP Policy News Journal
12/04/2013, Page 141 of 362
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