Spring Budget summary 2023

As expected, the Chancellor, Jeremy Hunt, resisted pressure to reduce taxes in any significant way, and the majority of his announced changes were already in the public domain. According to the Chancellor, the UK economy is on track to grow in the coming year with inflation halving.

We have listed any new variations in the UK tax rates, allowances, reliefs and other matters of interest in the update set out below.

Impact on UK businesses

Full expensing
The major announcement affecting business investment, and to reduce the impact of the forthcoming increase in Corporation Tax from April 2023, is the ability of companies to “fully expense” the purchase of qualifying plant and other equipment. 

Profits £50,000 £75,000 £100,000 £150,000 £200,000 £250,000
Effective CY % 19% 21.50% 22.75% 24.00% 24.63% 25.00%

This will include spending on, but is not limited to, warehousing equipment such as forklift trucks, tools such as ladders and drills, construction equipment such as bulldozers and excavators, machines such as computers and printers, vehicles such as tractors, lorries and vans, office equipment such as chairs and desks, and some fixtures such as kitchen and bathroom fittings and fire alarm systems.
Effectively, qualifying purchases can be written off completely against company taxable profits.

The ‘full expensing’ policy will be introduced from 1 April 2023 until 31 March 2026.

The 50% First Year Allowance (FYA)
This current allowance lets taxpayers deduct 50% of the cost of other plant and machinery, known as special rate assets, from their profits during the year of purchase. This includes long life assets such as solar panels and thermal insulation on buildings.

The 50% FYA was introduced alongside the super-deduction and was due to end on 31 March 2023. It will now be extended by three years to 31 March 2026. For each year following the first year, 6% of the remaining cost will be written off via Writing Down Allowances (WDAs).

The 50% FYA allows for faster relief than under the default WDAs-only regime, which is worth 6% each year, including year one.

As part of his commitment to maintain a stable economy, the Chancellor’s long-term ambition is to make the 50% FYA permanent.

Simplifying tax system
Changes to simplify the tax system of the UK were underlined by a number of changes to positively impact the lives of small business owners. They are:

  • Changes to the Enterprise Management Incentives (EMI) scheme from April 2023 to simplify the process to grant options and reduce the administrative burden on participating companies. This includes, from 6 April 2023, removing requirements to sign a working time declaration and setting out details of share restrictions in option agreements.
  • Delivery of IT systems to enable tax agents to payroll benefits in kind on behalf of their clients – allowing agents to better support their clients and reducing burdens on employers.
  • The government will extend the Help to Save scheme by 18-months, on its current terms, until April 2025. A consultation will also be launched on longer terms options for the scheme. 
  • Measures to simplify the customs import and export processes, including improvements to the Simplified Customs Declaration Process, and the Modernising Authorisations project.

R&D tax credits
A £500 million per year package of support for 20,000 research and development (R&D) intensive businesses through changes to R&D tax credits was announced. In full, the Chancellor’s announced changes in this important area are:

  • The scheme is targeted specifically at loss making R&D intensive SMEs. Focusing support towards those most impacted by the rate changes introduced at Autumn Statement 2022.
  • A company is considered R&D intensive where its qualifying R&D expenditure is worth 40% or more of its total expenditure.
  • Eligible loss-making companies will be able to claim £27 from HMRC for every £100 of R&D investment, instead of £18.60 for non-R&D intensive loss makers.
  • Around 1,000 claiming companies will come from the pharmaceutical and life sciences industry. This will support the development of life saving medicines.
  • Around 4,000 digital SMEs will be from the computer programming, consultancy, and related activities sector. This will support the development of AI, machine learning and other digital based technologies.
  • Around 3,000 other manufacturing firms, and another 3,000 professional, scientific, and technical activities firms will also qualify for the enhanced support.
  • This builds on previously announced changes to support modern research methods by expanding the scope of qualifying expenditure for R&D reliefs to include data & cloud computing costs.
  • The permanent increase from 13% to 20% for the R&D Expenditure Credit rate announced at Autumn Statement 2022 also means the UK now has the joint highest uncapped headline rate of tax relief in the G7 for large companies.

Creative sector tax concessions
Newly announced reforms to tax reliefs for the creative sectors will ensure theatres, orchestras, museums and galleries are protected against ongoing economic pressures and will continue to guarantee that more world-class productions are made in the UK.

UK AI research support
£900 million of funding was committed for an AI Research Resource and an exascale computer – making the UK one of only a handful of countries to have one – and a commitment to £2.5 billion ten-year quantum research and innovation programme through the government’s new Quantum Strategy.

Levelling up
The following measures were announced to help level-up growth across the UK:

  • Greater responsibility for local leaders to grow their local economy.
  • Over £200 million for high quality local regeneration projects in areas of need, from the transformation of Ashington Town Centre to a skills and education campus in Blackburn.
  • Over £400 million for new Levelling Up Partnerships for twenty areas in England, such as Rochdale and Mansfield.
  • Business rates retention expanded to more areas in the next Parliament.
  • Delivering trailblazer devolution deals for the West Midlands and Greater Manchester Combined Authorities that include single multi-year settlements for the next Spending Review, alongside a commitment to negotiate further devolution deals in England.
  • 12 Investment Zones across the UK including 4 across Scotland, Wales and Northern Ireland.
  • £8.8 billion over the next five-year funding period for a second round of the City Region Sustainable Transport Settlements.

Many of the Budget decisions on tax and spending apply in Scotland, Wales and Northern Ireland. As a result of decisions that do not apply UK-wide, the Scottish Government will receive around an additional £320 million over 2023-24 and 2024-25, the Welsh Government will receive £180 million, and the Northern Ireland Executive will receive £130 million.

Previously agreed changes effective from April 2023
Changes to personal or business finances (from April 2023) that were agreed or announced prior to the Budget presentation by Jeremy Hunt on 15 March are listed below:

  • Corporation Tax: 19% rate for profits up to £50,000, tapering to main rate of 25% for profits over £250,000, from April 2023
  • £900 Cost of Living Payment for households on means-tested benefits in 2023-24
  • £300 Pensioner Cost of Living Payment in 2023-24
  • £150 Disability Cost of Living Payment in 2023-24
  • Business Rates: freezing the multiplier in 2023-24 
  • Business Rates: 75% relief for Retail, Hospitality and Leisure sectors in 2023-24, up to £110,000 cash cap
  • Business Rates: three-year transitional relief to limit bill increases at the revaluation
  • Business Rates: three-year supporting small businesses scheme for properties losing Small Business Rates Relief or Rural Rates Relief
  • Business Rates: delay improvement relief by one year to April 2024
  • Business Rates: relief for property improvements from 2024-25
  • Income Tax and National Insurance: maintain thresholds at 2023-24 levels until April 2028
  • Inheritance Tax: maintain thresholds at current level until April 2028
  • Income Tax: reduce the dividend allowance from £2,000 to £1,000 from April 2023 and then £500 from April 2024
  • Income Tax: reduce the additional rate threshold from £150,000 to £125,140 from April 2023
  • Capital Gains Tax: reduce the annual exempt amount from £12,300 to £6,000 from April 2023 then £3,000 from April 2024
  • Vehicle Excise Duty: equalise treatment of electric and internal combustion engine vehicles from April 2025
  • National Insurance: maintain the secondary threshold for employer contributions at current level from April 2023 until April 2028
  • R&D tax reliefs: rebalance generosity of reliefs from 1 April 2023
  • VAT: maintain registration threshold at current level, £85,000 to 31 March 2026
  • Van benefit charge: uprate with CPI in 2023-24
  • Car fuel benefit charge: uprate with CPI in 2023-24
  • First Year Allowance for electric vehicle charge points: extend for a further two years until April 2025
  • Pension Credit: uprate Standard Minimum Guarantee by CPI in 2023-24
  • Benefit cap levels: uprate by CPI in 2023-24
  • Capital Gains Tax: extend the period for no gain/no loss transfers to three years for couples that separate or divorce
  • Annual Investment Allowance: permanently set at £1m from April 2023
  • Income Tax: basis periods reform for the self-employed from April 2024 with transition year in 2023-24

Impact on personal finances

Increase in pensions’ tax support
The present £40,000 cap on annual pension contributions that qualify for Income Tax relief is being increased to £60,000 from 6 April 2023.

The present Lifetime Allowance is being abolished.

Both of these changes are intended to incentivise older employees to continue in work whilst continuing to build additional pension savings.

In addition, the Money Purchase Annual Allowance will increase from £4,000 to £10,000 and the minimum Tapered Annual Allowance will increase from £4,000 to £10,000 from 6 April 2023. 

The adjusted income threshold for the Tapered Annual Allowance will also be increased from £240,000 to £260,000 from 6 April 2023.

Childcare support increased 
Childcare support in England is being expanded to include children over the age of 9 months. The announcement confirmed 30-hours of free childcare for every child over the age of 9 months, with support being phased in until every single eligible working parent of under 5s gets this support from September 2025.

The changes will be introduced in phases, with 15-hours of free childcare for working parents of 2-year-olds coming into effect in April 2024 and 15 hours of free childcare for working parents of children from 9 months from September 2024.

Parents receiving Universal Credits as well as being in employment will receive financial support to include upfront payment of childcare costs. The maximum they can claim will also be boosted to £951 for one child and £.1,630 for two children – an increase of around 50%

Extension of Energy Price Guarantee
It was announced that the Energy Price Guarantee cap of £2,500 would be extended for the next three months until 30 June 2023. From 1 July 2023 (rather than 1 April 2023 as previously announced), this guarantee will change so that the typical household will pay on average £3,000 a year (an increase of £500). 

Also, from 1 July 2023, the government will adjust the Energy Price Guarantee premium that over 4 million households pay for their prepayment meter. This will bring their charges into line with comparable customers who pay by direct debit.

Duties on fuel frozen
The proposed 11p rise in fuel duty will be cancelled thus maintaining last year’s 5p cut for another 12-months.

Draught Relief
Draught Relief has also been significantly extended from 5% to 9.2%, so that the duty on an average draught pint of beer served in a pub, from 1 August 2023, will be up to 11 pence lower than the duty in supermarkets. The commitment to duty on a pub pint being lower than the supermarket has been termed the “Brexit Pubs Guarantee” by the Chancellor, and this change will also be enjoyed by every pub in Northern Ireland thanks to the Windsor Framework.

Access to employment reforms
Major set of reforms to support people into work, removing barriers that stop those on benefits, older workers, and those with health conditions who want to work.

OUR SUMMARY

One thing is for sure, our tax code and the supporting business regulations are becoming more complex in spite of the promoted changes towards simplifying matters. 

We encourage readers who are concerned or interested in more information on any of the announcements described in this short update, to pick up the phone to discuss how you may be affected.

Source:HM Treasury| 14-03-2023
UK Financial Dates 2023

Important Financial Deadlines You Need To Know For 2023

 

 

 

 

January
March
April
July
August
October
December

Everything you need to know for United Kingdom’s financial and tax deadlines for 2023! Make sure you have all of these dates noted down to avoid any surprises.

January self assessment deadlines

January

31 January – Self Assessment Date 



Self Assessment is a system HM Revenue and Customs ( HMRC ) uses to collect Income Tax. Tax is usually deducted automatically from wages, pensions and savings. People and businesses with other income (including COVID-19 grants and support payments) must report it in a tax return. You can read more about self assessments from our other blog posts:
 

 

Wimbledon March Tax Deadlines

March

5 March – Rail Fair Rises

The government has made the biggest intervention ever to ensure that rail fairs increases are capped at 5.9% for 2023. This is to help reduce the impact of high inflation on passengers. However, an increase is needed to support crucial investment and the financial stability of the railway. 

 

31 March – End of Help to Buy – Equity Loan


This is the legal completion deadline. This is the last date you and your homebuilder can legally complete the purchase of your home, and you’re expected to have your keys by 6pm. If you don’t complete by this date, you will not be eligible for the equity loan.

Farringdon UK Tax Deadlines

April

1 April – Energy Price Guarantee rises

While there will still be an Energy Price Guarantee for a 12-month period from April 2023 until April 2024, the unit cost for gas and electricity will be increased. This means that the typical household will pay an average £3,000 for their energy use for a year, rather than £2,500.

But of course, since the guarantee puts a cap on the unit price and not your actual bill, your final bill depends on how much you use.


5 April – End of the tax year

5 April is the end of the 2022 tax year. 

6 April – New tax year: pensions and benefits

6 April is the start of the 2023 tax year. 


6 April – New Tax year: tax changes

The Income Tax additional rate threshold (ART) will be lowered from £150,000 to £125,140, the income level at which an individual will not have any Personal Allowance, because £1 of the Personal Allowance is withdrawn for every £2 of income above £100,000 from 6 April 2023.

Some of our previous posts regarding tax changes for 2023:

 

London Accounting July Deadlines

July

31 July – Second Payment on account (Self Assessment)

Payments on account are tax payments made twice a year by self-employed Self Assessment taxpayers to spread the cost of the upcoming year’s tax.

They’re calculated based on your previous year’s tax bill. In other words, HMRC is making a prediction about your future income based on your past income. They’re due in two instalments – the deadlines are 31 January and 31 July.

You can read more about self assessments from our other blog posts:
 


31 July Deadline to use up non-barcoded stamps
From 31 July 2023 you will no longer be able to use non-barcoded stamps. If you still have some of these in your possession, you can swap them out by following this guide.

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Wimbledon Tax Accounting Deadlines

August

16 August – July inflation announcement

October

5 October – Deadline to register for Self Assessment

Register for Self Assessment if you’re self-employed or a sole trader, not self-employed, or registering a partner or partnership. 

 


18 October: Sept inflation announcement 


19 October – Deadline for postal payments of CIS, Class 1 B NICs and PAYE to HMRC


&

22 October – Deadline for electronic remittance of CIS, Class 1 B NICs and PAYE to HMRC

  • Under the Construction Industry Scheme ( CIS ), contractors deduct money from a subcontractor’s payments and pass it to HM Revenue and Customs ( HMRC ).
  • Employers pay 1B National Insurance on expenses and benefits they give to their employees. 
  • AYE is HM Revenue and Customs’ ( HMRC ) system to collect Income Tax and National Insurance from employment. You do not need to register for PAYE if none of your employees are paid £123 or more a week, get expenses and benefits, have another job or get a pension. However, you must keep payroll records.


31 October: Postal self-assessment deadline

If you are posting your self-assessment, you need to post the necessary documents by the 31st of October 2023.

December Tax Deadline UK

December

30 December: Opt in to PAYE

PAYE is HM Revenue and Customs’ ( HMRC ) system to collect Income Tax and National Insurance from employment. You do not need to register for PAYE if none of your employees are paid £123 or more a week, get expenses and benefits, have another job or get a pension. However, you must keep payroll records.


31 December: End of mortgage guarantee scheme

The mortgage guarantee scheme (launched in April 2021) is helping to increase the supply of 5% deposit mortgages for credit-worthy households by supporting lenders to offer these products through a government backed guarantee on new 95% mortgages until 31 December 2023

31 December 2023 – Due date to file company accounts with Companies House for limited companies with 31 March 2023 year end. 

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The Growth Plan 2022

The new Chancellor of the Exchequer, Kwasi Kwarteng, delivered a fiscal statement referred to as The Growth Plan 2022 on 23 September 2022. The statement to a packed House of Commons centred on the government’s plans for generating growth.

Colloquially referred to as a mini-budget, it would perhaps be more fitting to refer to the statement as a maxi-budget. In his first major statement since becoming Chancellor, a number of striking measures were announced representing a major shift in policy direction for the Exchequer.

Paying an estimated £45 billion for these measures will see borrowing levels soar as the government attempts to grow the economy and avoid a deep recession. It is hoped that these measures will help to reduce peak inflation by around 5%.

The Chancellor was also keen to remind the House of the measures already announced to tackle spiralling energy costs. This included the Energy Price Guarantee which will see the average household have their energy bills capped at £2,500 a year for the next two years, a £400 energy rebate for UK households as well as more support for vulnerable households.

A new Energy Bill Relief Scheme to help cut energy bills in the non-domestic sector will also apply to energy usage from 1 October 2022 to 31 March 2023 and will automatically be applied to qualifying businesses fuel costs.

Taxation changes

National Insurance

Before the Chancellor rose to his feet, a number of other important announcements had already been made. The first of these related to the new Prime Minister’s pledge to reverse the 1.25% rise in National Insurance contributions (NICs) that came into effect at the start of the 2022-23 tax year on 6 April 2022. This will see the reversal of the increase from 6 November 2022 and will cover Class 1 (both employee and employer), Class 1A , Class 1B and Class 4 (self-employed) NICs.

It was also confirmed by the Chancellor that the ring-fenced Health and Social Care Levy of 1.25% due to be introduced from April 2023 will not go ahead as originally planned. These measures will provide average savings of around £135 in this tax year and £330 in 2023-24 for almost 28 million people across the UK as well as a tax cut for 1 million businesses. The 1.25% increase to the rate of Income Tax on dividends which took effect in April 2022 will remain in place until April 2023.

Income Tax

The Chancellor announced that the government will reduce the basic rate of Income Tax to 19% (from 20%) with effect from April 2023. This brings forward the planned 1p cut in the basic rate by 12 months. According to HM Treasury, the 19% rate is the lowest the basic rate has ever been in the modern Income Tax system. There will also be a four-year transition period for Gift Aid relief to maintain the Income Tax basic rate relief at 20% until April 2027 to help support almost 70,000 charities.

The reductions will not apply to the non-savings and non-dividend income of Scottish taxpayers because the power to set these rates is devolved to the Scottish Government. However, the Scottish government will receive additional funding which they can use as they see fit, including a reduction on Income Tax or other taxes, or increased spending. The Income Tax rate cuts will apply to Welsh taxpayers.

The Chancellor also announced plans to scrap the 45% additional tax rate from April 2023 but following a significant backlash this move was cancelled on 3 October 2022.

Income Tax and dividend income

The tax rates payable on dividend income will revert back to those that applied before April 2022, from April 2023 in line with the 1.25% decrease in NIC contributions.

The rates that will apply in all regions of the UK from 6 April 2023 are:

  • Dividends that form part of the basic rate band – 7.5% (8.75% 2022-23)
  • Dividends that form part of the higher rate band – 32.5% (33.75% 2022-23)
  • Dividends that form part of the additional rate band – 38.1% (39.35% 2022-23)

The dividend tax is charged on taxable dividend income an individual receives that falls outside of the personal allowance and that exceeds the dividend allowance. The current £2,000 dividend tax-free allowance is unchanged.

Stamp Duty Land Tax (SDLT)

The Chancellor announced a permanent increase of the SDLT nil rate band to £250,000 (from £125,000) with immediate effect from the date of his announcement, 23 September 2022.

Prior to the announcement, no SDLT was payable for first-time buyers making a purchase of up to £300,000. This limit has now been increased by £125,000 with immediate effect to £425,000. The first-time buyers relief also increases the nil-rate threshold to £425,000 (£300,000 prior to 23 September 2022) for first-time buyers of properties costing up to £625,000 (£500,000 prior to 23 September 2022). There is no relief available for first-time buyers spending more than £625,000 on a property. There are a number of requirements that must be met in order to qualify for the relief.

These measures will reduce stamp duty bills across the board for all movers by up to £2,500 with first-time buyers able to access up £11,250 in relief.

It is important to note that these measures apply to England and Northern Ireland only. Any changes to the Land and Buildings Transaction Tax in Scotland or the Land Transaction Tax in Wales will be announced separately

Reversal of Corporation Tax increase

The Corporation Tax main rate had been set to increase from 19% to 25% from 1 April 2023 for companies with profits over £250,000. A Small Profits Rate (SPR) of 19% was also to have been introduced from the same date for companies with profits of up to £50,000 with a marginal rate of Corporation Tax. This would apply to companies making profits of between £50,000 and £250,000 meaning an incremental rise in the Corporation Tax rate from 19% to 25% depending on how much profit a firm was making.

The Chancellor has now confirmed that these planned rises have been cancelled in full. This means that the Corporation Tax rate will remain at 19% for all firms, regardless of the amount of profits made. The Chancellor was excited to inform the House that this means the UK will have the lowest Corporation Tax rate in the G20 group of the world's major economies.

Annual Investment Allowance threshold

The Annual Investment Allowance (AIA) was permanently set at £200,000 for all qualifying expenditure on or after 1 January 2016. Following the pandemic, this limit had been temporarily increased (with a number of extensions) to £1 million.

This increased threshold was set to expire on 31 March 2023, but the Chancellor announced that the limit will be permanently extended to £1 million. This will give business owners thinking about high-value investments in qualifying assets some comfort and remove the need to rush any capital acquisitions.

Investment Schemes

The Seed Enterprise Investment Scheme (SEIS) is to be extended to help more UK start-ups raise higher levels of finance.

The Enterprise Investment Scheme (EIS) and Venture Capital Trusts (VCT) will be extended beyond 2025.

Investment Zones

As part of the Growth Plan, the government is in discussions with 38 local authorities to establish investment zones in England.

The government will also work with the devolved administrations and local partners to deliver this opportunity to drive local growth in Scotland, Wales and Northern Ireland.

These Investment Zones will be designed to encourage investment and new economic activity, supporting growth and jobs. The Investment Zones will benefit from lower taxes and more relaxed planning frameworks to encourage rapid development and business investment.

VAT

The Chancellor announced that VAT-free shopping for overseas visitors is to be reintroduced to help encourage more tourists to the UK. The VAT Retail Export Scheme was cancelled on 1 January 2021. The old paper-based system will be replaced with a modern, digital one and will be put in place as soon as possible.

Miscellaneous

  • The planned increases next year in the duty rates for beer, cider, wine and spirits in line with RPI have all been cancelled.
  • The cap on bankers’ bonuses is to be scrapped to enhance London’s reputation as a worldwide banking centre.
  • The Office of Tax Simplification is to be wound down with responsibility for tax simplification being handed to Government.
  • There will be moves to simplify IR35 rules, including the repeal of the 2017 and 2021 reforms.
Source:HM Treasury| 22-09-2022