Budget 2013: The Best of The Rest

Budget 2013

Budget 2013

With all the fanfare of the increase in personal allowance to £10,000 ahead of schedule, the accelerated alignment of Corporation Tax rates and the £2,000 NICs break for small employers you may have missed some of these other important taxation announcements in the 2013 Budget:

New Close Company Loan Rules – Overdrawn Directors Loan Accounts (s.455 Tax)

Inheritance Tax Exempt Amount to Non UK Domiciled Spouses

Above the Line R&D Tax Credit

Budget 2013: Non UK Domiciled Spouse IHT Changes

Increase in the Lifetime Inheritance Tax Exempt Amount to Non UK Domiciled Spouses

The lifetime Inheritance Tax exempt amount for transfers between UK-domiciled individuals and their non UK domiciled spouse or civil partner is to be increased from £55,000 to £325,000 (i.e. in line with the nil rate band).

The exempt limit will then mirror the nil rate band as it increases.

UK Domicile Election

In addition there will be a new election regime, whereby non-UK domiciled individuals who are married or in a civil partnership with a UK domiciled person will be able to elect to be treated as UK-domiciled for Inheritance tax purposes.

The non UK domiciled spouse who makes an election will benefit from uncapped Inheritance tax exempt transfers from their spouse or civil partner, but subsequent disposals by them would be liable to IHT (subject to their own nil-rate band), irrespective of the location of the assets.

If no election is made then the non UK domiciled spouse’s overseas assets would be exempt from Inheritance tax but any transfers from their UK domiciled spouse or civil partner would be subject to the lifetime exempt limit above.