In November last year, Chancellor, Jeremy Hunt made some key announcements during his delivery of the Autumn Statement that could affect how much tax you pay from April 2023.
The new tax year is set to bring a number of changes that will impact businesses, so it is important to begin preparing for these changes.
In this blog, we outline the key measures that will come into effect from April this year.
Income tax rates
At the Mini Budget in September, the government announced a plan to abolish the 45% additional rate of income tax from April 2023. On 3 October 2022, the government stated that they would not proceed with this plan.
In the Autumn Statement it was announced that from 6 April 2023, the point at which individuals pay the additional rate will be lowered from £150,000 to £125,140.
The income tax personal allowance and higher rate threshold were already fixed at their current levels until April 2026 and will now be maintained for an additional two years until April 2028.
The table below shows income tax rates and thresholds for 2023-24, compared to 2022-23.
Reduction in the Dividend Allowance
The government will reduce the Dividend Allowance from £2,000 to £1,000 from April 2023 and to £500 from April 2024.
Additionally, from April 2023, the rates of taxation on dividend income will remain as follows:
As corporation tax due on directors’ overdrawn loan accounts is paid at the dividend upper rate, this will also remain at 33.75%.
Corporation Tax
From 1st April 2023, the corporation tax rate will remain at 19% for businesses with profits under £50,000.
For businesses with profits between £50,000 and £250,000, corporation tax will be paid at the main rate of 25% reduced by Marginal Relief.
The tax rate for profits in excess of £250,000 will be 25%.
Capital gains
The government has announced that the capital gains tax annual exempt amount will be reduced from £12,300 to £6,000 from April 2023 and to £3,000 from April 2024.
Vehicles
From 6 April 2023, car and van fuel benefits and the van benefit charge will increase in line with inflation.
Research and Development
For expenditure on or after 1 April 2023, the Research and Development Expenditure Credit (RDEC) rate will increase from 13% to 20% but the small and medium-sized enterprises (SME) additional deduction will decrease from 130% to 86% and the SME credit rate will decrease from 14.5% to 10%.
National Living Wage and National Minimum Wage
From 1 April 2023, the government will increase the National Living Wage (NLW) and National Minimum Wage (NMW).
The new rates will be as follows:
Energy
The Government has protected businesses this winter from these high energy costs through the £18 billion Energy Bill Relief Scheme.
However, Chancellor Jeremy Hunt has made it clear that this level of support is ‘unsustainably expensive’ and that the current scheme was always time limited to six months.
The Chancellor has said that any future support, while at a lower level, would be designed to help them transition to the new higher-price environment and avoid a cliff edge in support.
For consumers, the Energy Price Guarantee will be maintained through the winter, limiting typical energy bills to £2,500 per year.
From April 2023, the Energy Price Guarantee will rise to £3,000.
How Blue Spire can help
We will keep you up to date with any further upcoming changes to the tax system and how they may effect your company to ensure you are prepared for when the changes come into effect.
If you would like to talk to someone about any matters related to taxes, then please do not hesitate to get in touch with us today.
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