Spring Budget 2023

The Chancellor’s budget seems to be aimed at wealthy individuals and big businesses, with not a lot of encouragement for the small business.  There are a couple of things in the ‘back to work’ arena, but there is not a lot new in the tax regime for the smaller business.  Here are the headline updates:

 Business tax

  • Confirmation of corporation tax rate increase for profits over £50,000 from 19% to 25% from 1 April 2023 for profits over £250,000 (with a sliding scale in between)
  • ‘Super-deduction’ for plant and machinery bought up to 31 March 2023 replaced by 100% first-year allowance for NEW qualifying capital expenditure, for three years from 1 April 2023
  • Annual Investment Allowance is increased to £1Million (this can apply to 2nd hand purchases as well as new purchases.)
  • R&D tax reliefs will be available on spend up to 40% of total expenditure (up from 30%) from 1 April 2023
  • AV tax reliefs will increase from 1 April 2024

Personal tax

  • The main personal tax-free allowance and the 40% tax rate threshold remain frozen at their 2022/23 levels until the end of 2027/28.
  • The 45% threshold is lowered from £150,000 to £125,140 for 2023/24
  • Tax-free dividend allowance falls from £2,000 to £1,000, and CGT annual exempt amount falls from £12,300 to £6,000, for 2023/24
  • Pension savings thresholds significantly increased: from 6 April 2023, Annual Allowance rises from £40,000 to £60,000 (with related changes to tapering and Lifetime Allowance Charge is abolished; maximum tax-free lump sum remains 25% of former Lifetime Allowance, i.e. £268,275

 Back to work measures

  • Significant expansion of free childcare provision to be phased in from April 2024
  • Introduction of ‘Returnerships’ – similar to apprenticeships – to encourage over-50s back into work

 Other measures announced in the budget

  • Energy Price Guarantee retained at £2,500 for average household for another 3 months to 1 July 2023
  • Fuel duty frozen, and temporary 5p reduction retained, for another year
  • Significant expansion of free childcare provision to be phased in from April 2024

Read the full Spring Budget 20023 here.

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Published On: March 16, 2023

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