The Chancellor's Spring Budget speech on 15th March set out a number of tax measures aiming to boost business investment and support employment by incentivising work. An analysis of the key announcements is set out here by John M Taylor & Co, Chartered Accountantt and Business Advisors. You will also find useful commentaries to help you understand how the proposed changes may affect you personally.
Many of the key points relevant to the new tax year were announced back in November and included within our Autumn Budget briefing but the new announcements of interest are flagged below:
Individuals
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Tax free personal allowance to be frozen at £12,570 until 2028
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No changes to the basic, higher and additional rates of income tax for 2023/24 - these remain at 20%, 40% & 45%*
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Scottish resident taxpayers will see the higher and top rate of tax (on earned income only) increase by 1% to 42% and 47% respectively
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Dividend allowance decreasing to £1,000 from April 2023 and to £500 from April 2024
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Additional rate of income tax to kick in at £125,140 from April 2023 (this applies to the 'Top rate' of tax in Scotland)
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New - Pension Annual Allowance (AA) increasing to £60,000 from 6 April 2023
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New - Pension Lifetime Allowance removed from 6 April 2023 and abolished from April 2024
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National Insurance and Inheritance Tax thresholds frozen until 2028
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CGT annual exemption reducing to £6,000 from April 2023 and again to £3,000 from April 2024
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New - Energy Price Guarantee to be maintained for a further three months limiting typical energy bills to £2,500
* This income tax announcement relates only to savings/dividend income in Scotland as the Scottish Government sets income tax rates and thresholds for Scottish taxpayers in relation to earned income.
Businesses
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Main corporation tax rate introduced at 25% from 1 April 2023 on profits above £250k, small company rate of 19% continues to apply on profits up to £50k
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National Living Wage increasing to £10.42 from 1 April 2023 for those aged over 23, National Minimum Wage rates also increase
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R&D Tax Relief being reformed:
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SME scheme will now only see an 86% enhanced deduction for R&D expenditure with a 10% payable credit (New - 14.5% remains for loss-making R&D Intensive companies)
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Large company RDEC scheme will now see an increase to a 20% payable credit
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New - Full expensing (100% tax relief) for companies for (unlimited) expenditure on plant and machinery other than assets purchased for leasing or cars
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Annual Investment allowance set at £1m per annum on a permanent basis giving all businesses 100% tax relief on capital expenditure
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VAT Registration threshold frozen at 85,000 for a further two years until 31 March 2026