Submitted by
Sestini & Co | on Thu, 03/16/2023 - 10:55 | In
Budget,
Tax planning and pensions 16th March 2023 // In yesterday’s Budget, Chancellor Jeremy Hunt offered some positive news for individual pension savers, helping to offset the many tax increases are hidden in plain sight through the range of freezing measures as announced in the Autumn Budget.
The headline announcement for individuals was the abolition of the pension lifetime allowance; for businesses the headline positives were enhanced R&D credits and full capital expensing for three years of qualifying plant and machinery.
For a number of years, the government has been keen to crack down on tax avoidance, with this being reiterated in yesterday’s Budget – the maximum prison sentence for tax fraud will rise to 14 years from 7.
The OBR says the UK will now avoid recession this year, with its updated predictions showing incremental growth over the coming few years.
Wrapping up, the Chancellor said that “in November we delivered stability, today it’s growth”.
The latest changes to UK tax measures:
Measures for businesses
1. Corporation tax: corporation tax rises are still to go ahead as planned from April 2023, with Corporation Tax rising from 19% to 25% depending on profit level. Small businesses with profits under £50,000 a year will continue to pay 19%, the 25% rate will apply for businesses with profits over £250,000. Between these two rates, a system of marginal relief will apply.
2. Capital expenditure: full capital expensing on qualifying new plant and machinery is being introduced for 3 years, replacing the ‘super deduction’.
3.R&D: an enhanced R&D tax credit was announced, targeted at intensive R&D loss making SMEs. R&D intensive is defined as having qualifying R&D expenditure worth 40% or more of its total expenditure. From April 2023, this allows them to claim £27 of every £100 spent on R&D investment.
4.Investment Zones: 12 zones will be created with the majority in England, and one in each of Wales, Scotland and Northern Ireland.
Personal tax rates and National Insurance
5. The 45% additional rate of tax currently payable on income over £150,000 will apply to income over £125,140 with effect from April 2023.
6. Other income tax thresholds have been frozen at current levels until April 2028.
7. The dividend allowance will still be cut from £2,000 to £1,000 from April 2023 and then to £500 from April 2024.
8. Pension allowances: introduction of a major change with the removal of the lifetime allowance limit and a more generous annual allowance (increased to £60,000 from £40,000) from April 2023. The tapered annual allowance for taxpayers with income above a certain level (the adjusted income level) is increased from £4,000 to £10,000.
Capital Gains Tax
9. Conditional contracts: there will be a tightening up on disposal of assets under conditional contracts, providing HMRC with more time to assess tax dueon capital gains.
10. Annual exemption: as previously announced, the Capital Gains Tax annual exempt amount will be cut from £12,300 to £6,000 in April 2023 then to £3,000 from April 2024.
For households
11. For households, support to help with energy bills will continue from April-June 2023, with the energy price cap set at £2,500 (rather than the £3,000 previously announced).
12. The current stamp duty cut will remain in place until 31 March 2025.
Get in touch
If you’d like to discuss any of the changes and how they might affect you, please contact us on info@sestiniandco.com or call 01761 241 861.
