Nick Osler provides a checklist of tax-planning issues for partners.

Income tax rates and thresholds

The personal allowance for individuals born after 5 April 1948 increased by £1,335 to £9,440 from 6 April 2013, with the upper threshold of the basic-rate band reducing by £2,360 to £32,010.

For 2014/15, the personal allowance for individuals born after 5 April 1948 will increase to £10,000 – this increase has been brought forward by one year.

As previously announced, the additional rate of income tax has reduced from 50% to 45% from 6 April 2013 and the dividend additional rate reduced from 42.5% to 37.5%.

Cap on tax reliefs

As announced in last year's Budget, a cap on certain income tax reliefs claimed by individuals 'sideways' against general income took effect from 6 April 2013.

The cap will not apply to income tax relief on gift aid, other charitable donations, the enterprise investment scheme (EIS), the Seed EIS (SEIS) losses and overlap relief, nevertheless it will still affect many individuals, especially in relation to qualifying loan interest.

ISAs

The ISA investment allowance for 2013/14 has increased to £11,520. Up to £5,760 can be saved in a cash ISA and the remainder can be invested in a stocks and shares ISA.

The Junior ISA investment allowance and the Child Trust Fund investment allowance for 2013/14 has been raised to £3,720.

SEIS

CGT relief has been extended to gains realised in 2013/14, which are reinvested in one or more SEIS companies, subject to a maximum investment of £100,000 – relief is restricted to 50% of the qualifying investment.

To illustrate...

  • An individual realising gains in 2013/14 is able to reinvest a maximum of £100,000 into a SEIS company in 2013/14 or 2014/15, of which 50% will be exempt from CGT.
  • This compares to the maximum CGT exemption of 100% for gains realised in 2012/13, which were reinvested in 2012/13 or 2013/14.

Pension contributions

The annual allowance for 2013/14 remains at £50,000, together with the ability to use unutilised relief from the previous three tax years, with the lifetime allowance also remaining at £1.5m.

However, both the annual and lifetime allowances are set to reduce to £40,000 and £1.25m, respectively, with effect from 6 April 2014.

CGT – annual exempt amount

The annual exempt amount has increased by £300 to £10,900 for 2013/14. For the previous two tax years, it remained at £10,600.

Inheritance tax – nil-rate band

The freeze on the tax-free nil-rate band for inheritance tax will now be extended for a further three years. The current rate of £325,000 will therefore remain frozen until 2017/18.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.