Highlights from the Budget March 2013 - Employer loans as a benefit-in-kind
The exemption for small, employer-provided loans at less than the official rate of interest, will be increased from £5,000 to £10,000 from 6 April 2014. This is a welcomed move since the current £5,000 limit has been in place for many years and this merely introduces a sensible level at which a taxable benefit-in-kind will trigger.
As expected, from 6 April 2013, the Statement of Practice 1/09 is to be given a formal legislative basis so that employees who qualify for overseas workdays relief, carrying out duties under a single contract of employment in both the UK and overseas, will get relief determined on a “just and reasonable” basis so, in effect, this keeps the apportionment approach previously available under SP 1/09.
Highlights from the Budget March 2013 – Pension’s lifetime allowance protection
From 6 April 2014, the lifetime allowance is reduced to £1.25m and the annual allowance to £40,000. Individuals will be able to obtain fixed protection so that, in effect, the old lifetime limit of £1.5m will apply but this will be subject to strict conditions such as, after 5 April 2014, no further contributions to the pension will be permitted.
Highlights from the Budget March 2013 – IHT for “mixed” couples and civil partners
The IHT exempt amount that a UK domiciled individual can transfer to a non-UK domiciled spouse or civil partner has long been fixed at a ridiculously low level of only £55,000. However, from 6 April 2013, this limit is to be increased significantly to the equivalent of the nil rate band - £325,000. Furthermore, the opportunity of electing, irrevocably, for the non-UK domiciled spouse to be treated as UK domiciled for IHT purposes is now to be made available from 6 April 2013 and can be back-dated seven years to no earlier than 6 April 2013. If the non-UK domiciled spouse breaks UK tax residence for four complete UK tax years, the election will cease to be effective.This election allows a “mixed” couple to achieve the same IHT exempt amounts as spouses or civil partners who are both UK domiciled or both non-UK domiciled.