How does the 2013 Budget Affect your Business?

Kendall's Comments

Last week the 2013 budget was presented, now we have had time to digest it, here is our summary of what it means for your business.

 

We have picked our favourite 3 points and awarded the wooden spoon to the worse.

Employers National Insurance Allowance

This is really great news for all employers. From 1st April 2014 you will receive a annual £2,000 deduction from your Employers National Insurance bill.

 

For this to be of full benefit you will need to have a current monthly PAYE bill of at least £550, as you will save £166 per month.

 

If your monthly PAYE bill is currently less than £550 per month, you will not pay any Employers NI at all.

Increase in Personal Allowance

In April 2013 the personal allowance will increase to £9,440, this means you can earn £9,440 per year tax free. The increase is worth £267 per year in tax or £22.25 per month.

 

So if you are a sole trader or a partnership, you can make another £1,335 profit tax free.

 

Then in April 2014 the personal allowance will rise again to £10,000, so this will be worth £112 per year or £9.33 per month.

Cut in Business Tax

The corporation tax rate will be cut from 24% to 21% from April 2013. This has been all over the news and sounds really good, so why isn't this 1st on our list?

 

Well in order for it to be of any use you need to be a Limited Company with profits of at least £300,000, most small Limited Companies don't make this much profit, so continue to pay tax at 20%, therefore there is no cut.

 

We where tempted to make the fuel duty cut 3rd, as this is good news, but this is not really a cut because it is just removing a planned future increase.

A misleading tax cut

The corporation tax rate will be cut from 24% to 21% from April 2013. This has been all over the news and sounds really good, so why isn't this 1st on our list?

 

Well in order for it to be of any use you need to be a Limited Company with profits of at least £300,000, most small Limited Companies don't make this much profit, so continue to pay tax at 20%, therefore there is no cut.

 

We where tempted to make the fuel duty cut 3rd, as this is good news, but this is not really a cut because it is just removing a planned future increase.