Introduction
On 15 March 2023, the Chancellor Jeremy Hunt, delivered the Spring Budget. We have made a summary of the key measures impacting limited companies and individuals.
Income taxes and allowances
From 6th April 2023, the following will be in effect’
- The personal allowance remains at £12,570 and the basic rate band remains at £37,700. These will be frozen until April 2028
- The Basic rate of income tax will remain at 20%
- The 45% higher rate tax rate will remain in place
- The dividend tax rates will be as follows.
- The basic rate dividend tax will be 8.75%
- The higher rate dividend tax will be 33.75%
- The Additional rate dividend tax will be 39.35%
- The dividend allowance will reduce from £2,000 to £1,000.
- Individual Savings Account (ISA) limits will remain at £20,000.
- The annual pension allowance will increase from £40,000 to £60,000. The lifetime pension allowance limit of £1,073,000 will be abolished.
National insurance Contributions thresholds and rates
From 6 April 2023: the following will be in effect.
- The Class 1 lower earnings limit remains at the 2022-23 level of £6,396 per annum (£123 per week).
- The Class 2 small profits threshold remains at the 2022-23 level of £6,725.
- The other NICs thresholds, including the £9,100 secondary threshold will be fixed at their current levels until April 2028.
- The Employers’ NICs allowance is unchanged.
Corporation tax & limited company allowances
From 1 April 2023
- Corporation Tax rates will increase to 25% in April 2023 for companies with taxable profits above £250,000.
- The 19% rate will continue to apply to companies with profits below £50,000.
- Where profits are between £50,000 and £250,000 marginal rates will apply.
- Diverted Profits Tax will also increase from 25% to 31% in April 2023.
- Capital allowances annual investment allowance will remain at £1million.
- Amounts invested in IT equipment, plant or machinery can be deducted in full and immediately from taxable profits. This replaces the “super deduction” previously in place
There will be an increase in limits for the Seed Enterprise Investment Scheme (SEIS) from April 2023
- Companies will be able to raise up to £250,000 of SEIS investment. The current limit is £150,000.
- The gross asset limit will be increased from £200,000 to £350,000 and the trading time limit from two to three years
- The individual annual investor limit of £100,000 will be doubled to £200,000
Research and Development (R&D) tax relief and rates from 1 April 2023
- The Research and Development Expenditure Credit (RDEC) rate will increase from 13% to 20%.
- The SME credit rate will decrease from 14.5% to 10%.
- There will be cuts for small and medium companies investing more than 40% in research and development, which will be worth £27 for every £100 spent.
Other
- Inflation in UK will fall from 10.7% in 2022 to 2.9% by the end of 2023 per the Office for Budget Responsibility forecast
- The Climate Change Agreement Scheme will be extended for two years to allow eligible businesses £600m of tax relief on energy efficiency measures.
- Nuclear power will also be classed as “environmentally sustainable” which will allow it to receive more public-private funding.
- The Energy Price Guarantee will remain at £2,500 for the period April – June 2023.
- From 1 August 2023, duty on draught products in pubs will be 11p lower than supermarkets including in Northern Ireland. An 8% discount.
- The extension of the fuel duty freeze will continue for a further 12 months. The 5p cut to the levy will remain in place.
- In eligible households where all adults are working at least 16 hours, the government will introduce 30 hours of free childcare for every child aged 9 months to 4 years to be introduced in stages from 2024 to 2025
- There will be incentive payments of £600 for childminders. This will rise to £1,200 for those who join through an agency.
- The government will also change minimum staff-to-child ratios from one to four to two to five in England.
- There will be an increase by almost 50% childcare funding for parents on Universal Credit: families will now be able to claim £951 for 1 child & £1,630 for 2 children.
- The government will introduce a new voluntary scheme aimed at disabled people in England and Wales called “Universal Support”
- This will see the government spend up to £4,000 a person to help them find appropriate jobs.
If you need any help understanding how the above changes will affect your business please don’t hesitate to reach out to us at hello@cfo360.co.uk
