|
Rates
and Allowances for 2003 and 2004
National
Insurance
Last
year the Chancellor increased National Insurance for employees/self-employed
by 1%, and for the employer by 1%. In addition for the employee/self-employed
increase, there is no ceiling on earnings. Planning: this
makes pension contributions more attractive and it improves
the arguments in favour of trading through a Limited Company
rather than self-employed.
Child
Tax Credit
This
was also announced last year and affects households with children
and with gross income of less than £58,000. We have
more detailed information if you feel it might be relevant
to you or to someone you know. Planning: to receive the
full benefit you must apply before 5 July 2003.
Anti-avoidance
measures
The Chancellor
announced 3 measures aimed at combating tax loss
•
The decision in the Mansworth v Jelley (share option) case
has been reversed.
•
Domestic workers are to be treated as caught by the IR35 legislation.
•
Share-based remuneration causing a loss of tax and NI is to
be scrutinised. This is thought to mean the payment of dividends
to spouses whose involvement in the business is minimal. The
relevant anti-avoidance legislation is already in place but
is rarely used. This quiet Press Notice signifies the Revenue's
intention to look at matters more closely in future. Planning:
we need to ensure that Dividends are properly documented and
paid on a timely basis. It has been our policy to ensure that
this happens for some time now. Otherwise we can only await
developments.
Employee
Share Schemes
The government
announced its intention to simplify the employee share schemes
legislation and reduce the administrative and regulatory burden
on employers. The measures will modernise both Company Share
Options Plans, Save As You Earn schemes and Share Incentive
Plans.
Charitable
Donations
Finally,
the Chancellor, having hit taxpayers with a substantial increase
in NIC's, thought it would be a good idea if taxpayers who
are due repayments donate some or all of the repayment to
charity. They have introduced a new facility to do so - it
will be interesting to see the take up of the Chancellors
offer!
Rates and Allowances
for 2003 and 2004
Rates and allowances
for income tax, corporation tax, capital gains tax, inheritance
tax and the pension schemes earnings cap are set out below.
|
|
2002-03 (£)
|
2003-04 (£)
|
Increase (£)
|
|
Income tax allowances
|
|
|
|
|
Personal allowance
Personal allowance for people aged 65-74
Personal allowance for people aged 75 and over
|
4,615
6,100
6,370
|
4,615
6,610
6,720
|
0
510
400
|
|
Income limit for age-related
allowances
|
17,900
|
18,300
|
400
|
|
Married couple’s
allowance for people born before 6 April 1935
Married couple’s allowance –aged 75 or more
Minimum amount of married couple’s allowance
Blind person's allowance
|
5,465
5,535
2,110
1,480
|
5,565
5,635
2,150
1,510
|
100
100
40
30
|
|
Capital gains tax annual
exempt amount:
Individuals etc
Other
trustees
|
7,700
3,850
|
7,900
3,950
|
200
100
|
|
Inheritance tax threshold
|
250,000
|
255,000
|
5,000
|
|
Pension schemes earnings
cap
|
97,200
|
99,000
|
1,800
|
|
Taxable bands 2002-03 (£)
|
Taxable bands 2003-04 (£)
|
|
Starting rate 10%
|
0 –
1,920
|
Starting rate 10%
|
0 –
1,960
|
|
Basic rate 22%
|
1,921 –
29,900
|
Basic rate 22%
|
1,961 –
30,500
|
|
Higher rate 40%
|
Over 29,900
|
Higher rate 40%
|
Over 30,500
|
|
Corporation tax profits
2003-04 (£)
|
|
|
Starting rate Zero %
|
0 –
10,000
|
|
Marginal relief
|
10,001 – 50,000
|
|
Small companies’
rate 19%
|
50,001 – 300,000
|
|
Marginal relief
|
300,001 – 1,500,000
|
|
Main rate 30%
|
1,500,001or more
|
The
main rate of corporation tax for 2004-05 will be 30 per cent.
National Insurance changes from 6
April 2003
|
|
2002/2003
|
2003/2004
|
|
Class 1 Employees
|
|
On first
|
£89 pw
|
Nil
|
£77 pw
|
Nil
|
|
Between
|
£89 - £585
pw
|
10%
|
£89 - £595
pw
|
11%
|
|
Over
|
£585 pw
|
Nil
|
£595 pw
|
1%
|
|
Class 1 Employers
|
|
On first
|
£87 pw
|
Nil
|
£89 pw
|
Nil
|
|
Between
|
£87 - £585
pw
|
11.8%
|
£89 - £595
pw
|
12.8%
|
|
Over
|
£585 pw
|
11.8%
|
£585 pw
|
12.8%
|
|
Class 2 Self employed
|
|
Flat rate
|
|
£2 pw
|
|
£2 pw
|
|
Class 3 Voluntary
|
|
Flat rate
|
|
£6.85 pw
|
|
£6.95 pw
|
|
|
|
|
|
|
|
Class 4 Self
employed
|
|
On profits between
|
£4,615 - £30,420
pa
|
7%
|
£4,615 - £30,940
pa
|
8%
|
|
|
|
|
above £30,940
|
1%
|
Stamp
taxes from Budget day to 30 November 2003
| Transfers
of property (consideration paid) |
| Rate
(%) |
All
property |
Disadvantaged
areas |
| |
|
Residential |
Non-residential |
| Zero |
£0
- 60,000 |
£0
- 150,000 |
All |
| 1 |
Over
£60,000 - 250,000 |
Over
£150,000 – 250,000 |
|
| 3 |
Over
£250,000 – 500,000 |
Over
£250,000 – £500,000 |
|
| 4 |
Over
£500,000 |
Over
£500,000 |
|
New
leases (lease duty)
| Duty
on rent |
|
| Term |
Rate
of charge on average annual rent |
| Not
exceeding 7 years |
1
per cent * |
| More
than 7 years but not exceeding 35 years |
2
per cent |
| More
than 35 years but not exceeding 100 years |
12
per cent |
| More
than 100 years |
24
per cent |
| *
applies only where the rent exceeds £5,000 per annum |
|
Duty
on premium is the same as for transfers of property
(except special rules apply for premium where rent exceeds
£600 annually)
Stamp
taxes from 1 December 2003 (implementation of stamp duty land
tax)
Transfers
of property (consideration paid)
| Rate
% |
All
land in the UK
|
Land
in disadvantaged areas
|
| |
Residential |
Non-residential |
Residential |
Non-residential |
| Zero |
£60,000 |
£150,000 |
£150,000 |
All |
| 1 |
Over
£60,000 – 250,000 |
Over
£150,000 – 250,000 |
Over
£150,000 – 250,000 |
|
| 3 |
Over
£250,000 – 500,000 |
Over
£250,000 – 500,000 |
Over
£250,000 – 500,000 |
|
| 4 |
Over
£500,000 |
Over
£500,000 |
Over
£500,000 |
|
| Property
that is not land, shares or interests in partnerships
will no longer be subject to stamp duty. |
New
leases
| Proposed
duty on rent* |
|
|
| Rate
(%) |
Net
present value of rent
|
| |
Residential |
Non-residential |
| Zero |
£0
- £60,000 |
£0
- £150,000 |
| 1% |
Over
£60,000 |
Over
£150,000 |
| *
Subject to consultation |
Duty
on premium is the same as for transfers of land (except
special rules apply for premium where rent exceeds £600 annually).
The rate
of stamp duty / stamp duty reserve tax on the transfer of
shares and securities is unchanged at 0.5 per cent for 2003-04.
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