Official Statistics

Budget 2013 policy decisions table

Published 20 March 2013

This table shows the cost or tax yield of the measures set out by the Chancellor in Budget 2013.

1. Previously announced (smaller measures)

1.1 Carbon Reduction Commitment: exclude schools

Tax

Year	13-14	14-15	5-16	16-17	17-18
£m	0	0	-65	-65	-65

Schools and academies will no longer be part of the carbon reduction commitment with effect from April 2014. The government will look at alternative robust measures that will incentivise and support schools to obtain both energy cost and emission reductions.

1.2 Government response to OTS review of share schemes

Tax

Year	13-14	14-15	5-16	16-17	17-18
£m	-40	-45	-50	-55	-55

The OTS made 28 recommendations on tax advantaged employee share schemes. The government will be implementing 15 of them. They are largely technical changes which will simplify the schemes making them more attractive to employers and employees.

1.3 Carbon price floor: Northern Ireland exemption

Tax

Year	13-14	14-15	5-16	16-17	17-18
£m	-20	-25	-40	-45	-45

Northern Ireland will be exempt from the carbon price floor (tax on fossil fuels used in electricity generation). This is because NI and the Republic of Ireland have a linked electricity market, so tax would discriminate.

1.4 Annual charge and SDLT 15% rate: reliefs for commercial businesses

Tax

Year	13-14	14-15	5-16	16-17	17-18
£m	-30	-40	-40	-40	-45

Carve out for commercial businesses of Budget 12’s SDLT anti-avoidance measures (annual charge on residential property worth £2m+ and owned by companies AND 15% SDLT rate on properties worth £2m+ purchased by companies).

1.5 Capital Gains Tax on disposals of high value residential property: extension to UK non-natural persons

Tax

Year	13-14	14-15	5-16	16-17	17-18
£m	25	0	0	5	5

Extension of the Budget 12 SDLT anti-avoidance measure, CGT on sale of high value property by non-resident companies, to UK companies as well as overseas ones.

1.6 Universal Credit: exempt from income tax

Tax

Year	13-14	14-15	5-16	16-17	17-18
£m	0	0	-35	-35	-30

Universal Credit payments will be exempt from income tax. Four of the six benefits that will be replaced by UC were already tax exempt. This will simplify the way UC is administered.

1.7 Debt Cap: tightening of rules

Tax

Year	13-14	14-15	5-16	16-17	17-18
£m	50	60	50	35	30

We are tightening the definition of a Group Treasury Company; the nominated part of the company that is responsible for borrowing and lending money and should be revenue neutral. It is a revenue protection measure.

1.8 Building Societies: capital instruments

Tax

Year	13-14	14-15	5-16	16-17	17-18
£m	20	20	20	20	30

Scoring a measure that came into effect on 1 March (additional background line to follow).

1.9 Employee shareholder status: CGT changes

Tax

Year	13-14	14-15	5-16	16-17	17-18
£m	0	0	negligible	5	30

Announced at AS, up to £50K shares given to the employees through the scheme will be CGT exempt when sold, this scoring reflects the fact that we have delayed this from April to September.

1.10 Enterprise Managemnt Incentive: qualification for CGT entrepreneurs’ relief

Tax

Year	13-14	14-15	5-16	16-17	17-18
£m	-10	-15	-20	-25	-25

As announced at Budget 2012, employees that are given EMI shares by qualifying companies will pay either no or reduced CGT when they sell them.

1.11 Lorry road user levy and offsetting VED reduction

Tax

Year	13-14	14-15	5-16	16-17	17-18
£m	0	25	25	25	25

Tax on foreign lorries weighing 12 tonnes and over for using the UK road network. This levels playing field – all other European countries do the same.

1.12 Income tax: transfer of assets abroad

Tax

Year	13-14	14-15	5-16	16-17	17-18
£m	0	0	-10	-10	-10

This is a technical change to the ToA (transfer of assets) regime to ensure that we are EU compliant and to improve the clarity of the rules. The regime was set up to prevent people from avoiding paying income tax by shifting assets abroad.

1.13 Cap on reliefs: exemption for EIS share loss relief and overlap relief

Tax

Year	13-14	14-15	5-16	16-17	17-18
£m	0	-20	-10	-10	-10

This is the cost of the previously announced exemption from the cap on reliefs for EIS share loss relief and overlap relief.  Announced in the draft Finance Bill.

1.14 Carbon price floor: non rate changes

Tax

Year	13-14	14-15	5-16	16-17	17-18
£m	5	5	5	5	5

Technical change to reduce administration and associated costs of carbon price floor for electricity generators.

1.15 Disincorporation relief

Tax

Year	13-14	14-15	5-16	16-17	17-18
£m	-10	-5	-5	-5	-5

Government is introducing a disincorporation relief for five years from 1 April. The relief works so that the value of assets (goodwill and an interest in land) are not liable to corporation tax. It is available to businesses with total qualifying assets not exceeding £100,000.

1.16 Vehicle excise Duty: PIP disability exemption

Tax

Year	13-14	14-15	5-16	16-17	17-18
£m	-10	-10	-10	-5	0

With Personal Independence Payment (PIP) replacing the Disability Living Allowance, tax exemption is maintained for the most needy (i.e. people with the most serious difficulties getting around).

1.17 Pension Credit pass through

Spend

Year	13-14	14-15	5-16	16-17	17-18
£m	5	5	5	5	negligible

Greater support for poorer pensioners by uprating the minimum income they will receive. This will be part paid for through reductions in savings credit for wealthier pensioners.

2. Previously announced (Mid Term Review)

2.1 Single Tier: introduce from 2016-17

2.2 Contracting out NICs: public sector employers

Tax

Year	13-14	14-15	5-16	16-17	17-18
£m	0	0	0	3325	3285

This is the revenue from the increased NICs that will paid after the single tier pension comes in by those who have previously contracted out of the second state pension.

2.3 Contracting out NICs: public sector employees

Tax

Year	13-14	14-15	5-16	16-17	17-18
£m	0	0	0	1365	1350

This is the revenue from the increased NICs that will paid after the single tier pension comes in by those who have previously contracted out of the second state pension.

2.4 Contracting out NICs: private sector employers

Tax

Year	13-14	14-15	5-16	16-17	17-18
£m	0	0	0	570	565

This is the revenue from the increased NICs that will paid after the single tier pension comes in by those who have previously contracted out of the second state pension.

2.5 Contracting out NICs: private sector employees

Tax

Year	13-14	14-15	5-16	16-17	17-18
£m	0	0	0	235	235

This is the revenue from the increased NICs that will paid after the single tier pension comes in by those who have previously contracted out of the second state pension.

2.6 Other Mid Term Review

2.7 Inheritance tax: threshold freeze for 3 years from 2015-16

Tax

Year	13-14	14-15	5-16	16-17	17-18
£m	0	0	20	80	170

We announced in February that we would freeze the IHT threshold for 3 years from 2016-17 in order to fund part of the Dilnot social care reforms.  4% of estates currently pay IHT (16,000 estates paid it in 2009/10) and we expect that this measure will lead to approximately 5,000 additional estates paying IHT from 2017-18.

2.8 Social Care funding reform: introduce Dilnot cap from 2016-17

Spend

Year	13-14	14-15	5-16	16-17	17-18
£m	0	0	0	-1000	-1000

Social care reforms have been brought forward by one year and will not start in 2016-17. The social care cap will remain at £75k (17/18 prices) but will be converted to 16/17.

2.9 Childcare additional funding (1)

Spend

Year	13-14	14-15	5-16	16-17	17-18
£m	0	0	-400	-750	-750

This is the cost of the new Tax-free Childcare scheme announced by the government on Tuesday.

(1) Additional funding for childcare will start in Autumn 2015. The government is allocating £750m per annum for this support.

3. Growth and Enterprise

3.1 National Insurance: £2,000 Employment Allowance

Tax

Year	13-14	14-15	5-16	16-17	17-18
£m	0	-1255	-1370	-1595	-1725

The Government is introducing an Employment Allowance for all businesses and charities. Effective from April 2014, they will have their employers NICs bills reduced by up to £2,000. An estimated 1.25million businesses will benefit with 450,000 of the smallest businesses taken out of paying employer NICs altogether.

3.2 Corporation tax: reduce main rate to 20% from 2015-16

Tax

Year	13-14	14-15	5-16	16-17	17-18
£m	0	-5	-400	-785	-865

April 2015, the main rate will be 20%. The UK will now have the joint lowest corporation tax rate in the G20 alongside Saudi Arabia, Russia and Turkey. This will reduce the tax burden on business by £7bn by 2015-16. It will also unify the rate with the small profits rate simplifying the tax system showing that the UK is open for business.

3.3 Capital Spending: maintain 2014-15 level

Spend

Year	13-14	14-15	5-16	16-17	17-18
£m	0	0	-3000	-3000	-3000

Increasing capital spending plans by £3b per year from 2015-16 meaning £18 billion additional investment by the end of the next Parliament and stting out funded longterm capital plan. This means public investments as a % of GDP will be higher on average in this Parliament.

3.4 Affordable housing

Spend

Year	13-14	14-15	5-16	16-17	17-18
£m	0	-125	0	0	0

Govt is going to build on its existing commitments by doubling the existing Affordable Homes guarantee programme to support a further 15,000 new affordable homes in England by 2015.

3.5 Right to Buy changes

Spend

Year	13-14	14-15	5-16	16-17	17-18
£m	-5	45	40	50	50

Govt will broaden the Right to Buy opportunity by looking at ways to simplify the application process; reduce the qualifying eligibility period to three years and; raise the discount cash cap in London to £100,000.

3.6 Stamp duty: abolish schedule 19 charge

Tax

Year	13-14	14-15	5-16	16-17	17-18
£m	0	-145	-145	-150	-160

This is a growth measure which is designed to make UK funds more competitive and improve returns to investors, making UK funds more attractive. This will encourage more funds to be based in the UK, helping to create jobs and growth.

3.7 Abolishing stamp duty on AIM and other junior shares

Tax

Year	13-14	14-15	5-16	16-17	17-18
£m	5	-170	-170	-170	-175

Tax breaks for investing in SME shares. (We are abolishing stamp tax on shares in companies quoted on growth markets such as AIM and the ISDX.)

3.8 Seed Enterprise Investment Scheme: extend CGT holiday to 2013-14

Tax

Year	13-14	14-15	5-16	16-17	17-18
£m	0	-5	negligible	0	0

CGT holiday for SEIS will be extended for an additional year, at a rate of 50 per cent relief. Individual investors who receive gains after 6 April 2013 and reinvest them by buying new shares in small, early stage companies will pay a reduced Capital Gains tax.

3.9 Employee shareholder status: income tax

Tax

Year	13-14	14-15	5-16	16-17	17-18
£m	0	-15	-45	-65	-75

The Government has announced that transfers of shares from an employer to an employee under the new Employee shareholder status will not be subject to income tax or NICs on the first £2,000.  Signalled to Parliament in the last few days.

3.10 R&D Tax Credits: increase Above the Line credit to 10%

Spend

Year	13-14	14-15	5-16	16-17	17-18
£m	-20	-80	-85	-90	-95

The above the line R&D tax credit relief rate will be increased to 10%. ‘Above the line’ refers to the credit’s accounting treatment in that it will be accounted for in a company’s profit and loss account rather than in the company’s tax line (‘below the line’ - as per the current system). This will be more effective at influencing investment behaviour and will help to attract additional R&D activity to the UK.

3.11 Employee ownership: additional support

Spend

Year	13-14	14-15	5-16	16-17	17-18
£m	0	-50	-50	-50	-50

The government is setting aside £50m funding a year from 2014-15, to provide support for the employee ownership sector. In particular, the Government will introduce in Finance Bill 2014 a new capital gains tax relief on the sale of a controlling interest into an employee ownership.

3.12 Industrial Strategy

Spend

Year	13-14	14-15	5-16	16-17	17-18
£m	-125	-160	-180	-180	-180

Govt is announcing a UK-wide £1.6bn fund (over 10 years) to support sectors as part of its Industrial Strategy. Examples are aerospace, automotive, life sciences, nuclear and oil & gas.

3.13 Growth vouchers

Spend

Year	13-14	14-15	5-16	16-17	17-18
£m	-10	-25	0	0	0

The idea is to give SMEs vouchers to spend on external business advice (so to stimulate growth among SMEs and boost the external business advice market).  Exact details to be worked up.  This builds on a British Chamber of Commerce recommendation.

3.14 Tax relief: health interventions

Tax

Year	13-14	14-15	5-16	16-17	17-18
£m	0	-10	-10	-10	-10

The health and work assessment and advisory service replaces the Percentage Threshold Scheme and will provide occupational health advice for those at danger of long term sickness absence. There will be a targeted, capped tax relief for employers (when recommended by the service) for treatment to ensure it is not treated as a Benefit in Kind.

3.15 Health interventions

Spend

Year	13-14	14-15	5-16	16-17	17-18
£m	0	10	10	10	15

HMG removing a £50m pot of money for sick leave money. This is now being scrapped and replaced with a ‘Health Advisory service’ which will advise companies on how best to reduce sick leave in employees – creating better incentives. The cost of this will be £40m.

3.16 Bank Levy (offset CT changes)

Tax

Year	13-14	14-15	5-16	16-17	17-18
£m	0	195	250	245	250

The bank levy rate will rise from 0.130% to 0.142 % from 1 Jan 2014.  This increase offsets the benefit to the banking sector from additional cuts in the main rate of CT, including the Budget 2013 announcement on CT reduction.

4. Personal Tax

4.1 Personal allowance: increase by an additional £560 to £10,000 in 2014-15

Tax

Year	13-14	14-15	5-16	16-17	17-18
£m	0	-1075	-1045	-1060	-1210

Personal allowance will be increased by £560 to reach the Coalition commitment of £10,000 a year ahead of schedule. It will benefit 24.5million people, taking 257,000 out of income tax altogether. In 2015-16, the personal allowance will be uprated by CPI.

4.2 Pensions tax relief: individual protection

Tax

Year	13-14	14-15	5-16	16-17	17-18
£m	0	100	80	50	0

As announced at Autumn Statement, we will introduce an individual protection regime that will be offered in conjunction with the reduction in pensions Life Time Allowance. This protects individuals’ pensions that have already been built up above £1.25m but below current threshold of £1.5m from retrospective tax charges. This is a tax measure as it releates to Pension Tax releif although it does have some spending elements.

5. Duties

5.1 Fuel Duty: cancel September 2013 increase

Tax

Year	13-14	14-15	5-16	16-17	17-18
£m	-480	-810	-835	-870	-900

The fuel duty increase that was planned for 1 September 2013 is cancelled. Fuel duty will have been frozen for nearly three and half years; this represents the longest freeze in duty for over 20 years.

5.2 Alcohol: 1p off pint of beer and abolish escalator in 2014-15

Tax

Year	13-14	14-15	5-16	16-17	17-18
£m	-170	-215	-210	-205	-205

The beer duty escalator will end. Tax on an average pint of beer is cut by 1p from Monday 25 March 2013. Other alcohol duties will still rise by RPI+2%.

6. Avoidance and Debt

6.1 Tax repatriation from Jersey, Guernsey, and Isle of Man

Tax

Year	13-14	14-15	5-16	16-17	17-18
£m	80	240	325	235	170

The UK has agreed automatic tax information sharing agreements and disclosure facilities with Jersey, Guernsey and the Isle of Man (previously announced). Taking effect from 31 December 2013 it will apply to all existing and new accounts from that date.

6.2 Offshore employment intermediaries

Tax

Year	13-14	14-15	5-16	16-17	17-18
£m	0	80	85	85	90

The government will consult on strengthening obligations to ensure the correct income tax and NICs are paid by offshore employment intermediaries. This is a result of the review announced at Autumn Statement 2012. (Finance Bill 2014)

6.3 Partnerships

Tax

Year	13-14	14-15	5-16	16-17	17-18
£m	0	125	365	300	285

We are going to clamp down on the misuse of the partnership rules, something we have seen in many avoidance schemes closed down in recent years. We will consult on two particular aspects: removing the presumption of self-employment for LLP partners, which is a way of disguising employment relationships AND countering the artificial allocation of profits to partners to reduce tax. LLPs – action will mean that LLP members who are really employees will become liable to employee NICs and IT and the LLP as employer will have to operate PAYE and become liable to employer NICs Profit/loss allocations – action will prevent partnerships from artificially allocating profits to different parts of the partnership as a way of reducing liability.

6.4 Corporation Tax: losses

Tax

Year	13-14	14-15	5-16	16-17	17-18
£m	260	305	270	205	190

Bringing in new rules to prevent ‘loss buying’, where companies arrange to purchase from other companies future losses which are then used to get relief against profits entirely unconnected from the activity in which they arose.

6.5 Loans from close companies to participators

Tax

Year	13-14	14-15	5-16	16-17	17-18
£m	0	65	75	70	60

Clampdown on avoidance arrangements which try to exploit weaknesses in the law around the tax charge on loans from close companies (ones controlled by a small group of people) to participators (individuals with a share or interest in the company). We’re closing three loopholes with effect from today and will consult later this year on reform of the tax charge on loans from close companies to their participators.

6.6 IHT: limiting deduction of liabilities

Tax

Year	13-14	14-15	5-16	16-17	17-18
£m	5	20	15	15	15

Closing a loophole to combat IHT avoidance schemes that exploit the rules to get a deduction for outstanding debts against the value of an estate. The deduction is allowed regardless of whether the debt is repaid after death and irrespective of how the borrowed funds have been used, so under the schemes and to avoid IHT the debts aren’t repaid or are used to acquire assets which are not chargeable to IHT. Examples of how this works: A non dom buys a property in the UK on which they take out a mortgage with which they buy offshore property/assets which is excluded from IHT – when they die, the offshore property is IHT exempt and the mortgage on the UK house reduces the IHT liability here OR a beneficiary to the estate (e.g. child) makes a loan to the estate/individual (their parent), this reduces the value of the estate for tax purposes as we only tax the net value of the estate. Once the beneficiary inherits the estate they then forgive the estate the debt.

6.7 General Anti-Abuse Rule: non revenue protection

Tax

Year	13-14	14-15	5-16	16-17	17-18
£m	0	60	50	40	85

Announced at Budget 2012, the government will introduce a General Anti-Abuse Rule which will target the use and promotion of artificial abusive avoidance schemes. It will change the outcome of those schemes that cannot be defeated under current law but its major effect is to act as a deterrent.

6.8 Stamp Duty Land Tax: subsales

Tax

Year	13-14	14-15	5-16	16-17	17-18
£m	45	35	30	25	25

We are acting on the Chancellor’s warning at Budget 12 and introducing retrospective legislation to tackle the use of 2 aggressive SDLT avoidance schemes exploiting the ‘transfer of rights’ rules. The amount of tax at risk here is small (£30m), but it should have been obvious following CX Budget 12 statement that they wouldn’t be tolerated.

6.9 Debt: improving coding out

Tax

Year	13-14	14-15	5-16	16-17	17-18
£m	0	0	45	40	45

The government will consult on reforming HMRC’s ability to collect debts via a tax debtor’s tax code, known as ‘Coding Out’. The current limit of £3,000 per year for all tax debtors will be replaced with a graduated scale introducing higher limits for those with higher earnings – or up to £17,000 limit for those earning £90,000 or more. HMRC’s information technology (IT) system will also be upgraded to allow splitting of debts across years for ‘Coding Out’.

6.10 Avoidance schemes: enhanced information powers

Tax

Year	13-14	14-15	5-16	16-17	17-18
£m	0	5	35	35	35

There will be a consultation on proposals to introduce new information and penalty powers for high-risk promoters. The new information will require promoters to provide descriptions of the scheme, details of intermediaries and customers and there will be penalties for non-compliance. HMRC estimates there are roughly 20 businesses that are high-risk promoters.

6.11 Penalties in avoidance cases

Tax

Year	13-14	14-15	5-16	16-17	17-18
£m	0	55	60	5	10

HMRC will consult on a proposal that users of defeated avoidance schemes should notify HMRC promptly of any tax advantage gained and amend their return accordingly. A tax-geared penalty would be charged if they failed to do so.

7. Motoring and Environment

7.1 Capital allowances: Ultra Low Emission Vehicles

Tax

Year	13-14	14-15	5-16	16-17	17-18
£m	0	0	-5	-25	-35

We are extending the 100% first year allowance for companies investing in ULEVs for 3 years from 2015-16. With corporation tax at 21%, the allowance will reduce the cost of investment in an ULEV by 5.8%.

7.2 Company car tax: ULEVs

Tax

Year	13-14	14-15	5-16	16-17	17-18
£m	0	0	-10	-15	-15

We are announcing reduced rates of company car tax for vehicles that emit 75g/km CO2 or less (ULEVs) from 2015/16 until at least 2019/20.

7.3 VED: freeze rates for HGVs in 2013-14

Tax

Year	13-14	14-15	5-16	16-17	17-18
£m	-10	-10	-10	-10	-10

From 1 April 2013 VED rates will increase in line with the RPI, apart from VED rates for Heavy Goods Vehicles which will be frozen in 2013-14. As a result of the freeze in 2013-14, operators of HGVs, buses, and other vehicles affected will save between £5 and £60 in VED per vehicle.

7.4 Aggregates levy: freeze in 2013-14

Tax

Year	13-14	14-15	5-16	16-17	17-18
£m	-10	-15	-15	-15	-15

We are freezing the levy at £2 per tonne to help support the aggregate and construction industries.

7.5 Capital allowances: energy and water efficient technologies

Tax

Year	13-14	14-15	5-16	16-17	17-18
£m	5	15	25	30	20

We are completing the annual update to the list of qualifying equipment and technologies. Technology currently listed includes combined heat and power technology and solar thermal systems.

7.6 Capital allowances: energy saving plant & machinery in Northern Ireland

Tax

Year	13-14	14-15	5-16	16-17	17-18
£m	0	5	5	10	10

Removing availability of Enhanced Capital Allowances for expenditure on equipment for which Renewable Heat Incentive (RHI) or Feed-In Tariff (FIT) payments are also available in Northern Ireland. This brings NI into line with the rest of the UK.

8. Changes to spending forecasts

8.1 Spending total adjustment

Spend

Year	13-14	14-15	5-16	16-17	17-18
£m	1325	1085	0	0	0

Government departments’ budgets reduced by 1%.

8.2 Official Development Assistance: adjusting to meet 0.7% GNI target

Spend

Year	13-14	14-15	5-16	16-17	17-18
£m	135	165	200	250	305

Overseas aid spending reduced in line with new economic forecasts.

8.3 Special Reserve

Spend

Year	13-14	14-15	5-16	16-17	17-18
£m	300	0	0	0	0

Reducing the Special Reserve in 13/14 – We are reducing the Special Reserve by £300m in 13/14, in line with the MoD’s latest forecast of the continued wind-down of Afghan operations. There will be no impact on the frontline.

8.4 Equitable life

Spend

Year	13-14	14-15	5-16	16-17	17-18
£m	0	-45	0	0	0

We are making a voluntary payment of £5,000 to those policyholders aged over 60, who bought their Equitable Life With-Profits annuity before 1st September 1992.

8.5 TOTAL POLICY DECISIONS

Year	13-14	14-15	5-16	16-17	17-18
£m	1,315	-1,650	-2,850	1,740	1,305

8.6 Total spending policy decisions

Year	13-14	14-15	5-16	16-17	17-18
£m	1,605	1,055	0	0	0

8.7 Total tax policy decisions

Year	13-14	14-15	5-16	16-17	17-18
£m	-290	-2,705	-2,850	1,740	1,305

8.8 Total tax policy decisions excluding impact on government

Year	13-14	14-15	5-16	16-17	17-18
£m	-290	-2,705	-2,850	-1,585	-1,980

9. Financial transactions (2)

9.1 FirstBuy extension

Year	13-14	14-15	5-16	16-17	17-18
£m	-1,150	-1,430	-1,550	0	0

9.2 Build to Rent extension

Year	13-14	14-15	5-16	16-17	17-18
£m	-150	-445	-360	0	0

-Spending measures do not affect borrowing in 2015-16 and 2016-17 as they fall within the Total Managed Expenditure assumption.

(2) Financial transactions impact on PSND and not PSNB so do not feed through to the bottom line.