Budget 2013 – Summary

With very little room for manoeuvre in the public finances, the Chancellor still managed to spring some rather generous surprises in the Budget.

The ‘employment allowance’ of £2000 to be introduced from April 2014 will affect many small business and is very welcome, effectively reversing some of the increases to the National Insurance tax on employment which have taken place in recent years. There were also new measures to encourage ownership of shares by employees, by exempting sales of shares to employees from CGT, and allowing employers to give up to £2000 worth of shares to employees tax free.

The increase in the personal allowance to £10,000 from April 2014 will remove many lower paid, part time staff from tax, but there was no such increase in the point at which National Insurance kicks in, which is a shame, as this would be a significant simplification.

Again on the income tax front, there is going to be a new benefit of £1,200 towards childcare costs, where both parents work – this can potentially be claimed by families whose income is up to £300,000 which is interesting, given that families with income of over £60,000 have just head Child Benefit effectively removed.

Finally there were changes to IHT which extend the freeze on the nil rate band until 2018, and also prevent the use of deductible loans to invest in non-taxable assets, which mean that many people who have made arrangements to counter IHT in this way will need to think again.