Budget – March 2013

• The personal allowance for under 65’s is to increase by £540 in April 2014, taking it to £10,000.
• Working families will benefit from a 20% tax relief on childcare costs, offering an annual saving of £1,200 per child under 12. The scheme will be phased in from autumn 2015.  If you have more than 1 child in childcare, you will be better off.  If you have 2 parents using the scheme for 1 child currently, you will be worse off.  It will be administered by the existing child care voucher companies.
• A new employment allowance for businesses and charities.  Giving them entitlement to a £2000 per year employment allowance towards their employer National Insurance Contribution (NICs) bill, from April 2014, to reduce the cost of hiring staff.  I’m not sure how this will work.  Will it be a monthly allowance or paid back after the year end?
• Corporation tax will be cut to 20% in 2015.  It’s currently 28% and goes down to 24% next month and 21% in 2014.  This is a race to the bottom of Europe.  Do corporations really relocate on the back of a (short-term?) small reduction in CT?  Probably not enough of them to make up for the revenue shortfall that this creates.

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