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The budget for 2013 was announced on the 20th of March 2013 by Chancellor of the Exchequer George Osborne. It addresses the economy, housing and fuel but what does is mean for contractors? Here are some excerpts that effect contractors, you can watch the Chancellor's statement here or you can download the budget in PDF form here.

IR35 and Office Holders

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IR35
– As announced at Autumn Statement 2012, the Government will make a small amendment to the existing IR35 provisions to equalise the tax and NICs treatment of office holders, and put beyond doubt that the legislation applies to office holders for tax purposes. (Finance Bill 2013

Little was said in regards to IR35 or guidance around office holders but it does look promising that more information may be provided on the 28th of March which is when the Finance Bill is due.


Corporation Tax

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At Budget 2013 the Government announces it will go further, and will reduce the main rate of corporation tax by an additional 1 percentage point in April 2015, so it will reach 20 per cent. In the process, the Government will unify the small profits rate and the main rate so there is a single rate of corporation tax, simplifying the tax system.


Personal Allowance

The Government will:
• meet its commitment to make the first £10,000 of income free from income tax a year ahead of schedule: the personal allowance will be increased by £560 to £10,000 in 2014-15. By April 2014, 2.7 million low income individuals under 65 will have been lifted out of income tax altogether and from April 2014 the typical basic rate taxpayer will pay £705 less income tax a year in cash terms as a result of this Government’s actions;

Pensions

2.55 Reduction in the Annual Allowance (AA) for pensions contributions – As announced at Autumn Statement 2012, the AA for pension savings will reduce from £50,000 to £40,000 for 2014-15 and subsequent years. (Finance Bill 2013)

Tackling tax evasion and avoidance

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The vast majority of individuals and businesses pay their fair share of tax. Budget 2013 takes action against those who do not by announcing a significant crackdown on offshore tax evasion, tax avoidance and aggressive tax planning in four key areas:

  • offshore tax evasion;
  • avoidance of employment taxes;
  • tax avoidance schemes; and
  • corporation tax.

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Collectively, these announcements will raise over £4.6 billion in new revenue over the next five years and protect against the loss of billions of pounds of revenue through the immediate closure of 10 loopholes.

Offshore Oil and Gas Industry

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A successful UK shale gas industry has the potential to provide new employment and support UK energy security, benefiting the economy, taxpayers and communities.

The Government will:

  • introduce a new shale gas field allowance and extend the ring-fence expenditure supplement from six to ten years for shale gas projects to promote investment in this industry at an early stage of its development. The Government will consult on the detail of these reforms, including whether they should be extended to other forms of onshore unconventional gas;
  • produce technical planning guidance on shale gas by July 2013 to provide clarity around planning for shale gas during the important exploration phase for the industry. As the shale gas industry develops the Government will ensure an effective planning system is in place and by the end of the year will produce guidance for the industry to ensure the planning system is properly aligned with the licensing regime and regulatory regimes principally: health and safety; and environmental protection. The Government will keep under review whether the largest shale gas projects should have the option to apply to the major infrastructure regime;
  • develop proposals by summer 2013 to ensure that local communities will benefit from shale gas projects in their area; and
  • provide detail of the objectives, remit and responsibilities of the Office of Unconventional Gas and Oil.

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In addition, the Government is acting to support investment in offshore oil and gas. At Budget 2012, the Government committed to introducing a new contractual approach to provide further certainty on decommissioning relief on the UK Continental Shelf. Following successful consultation, Budget 2013 announces that contracts will be signed later in 2013, providing the certainty needed to unlock billions of pounds of additional investment.