On Wednesday 15 March 2023, Chancellor Jeremy Hunt delivered his Spring Budget, which he stated was a budget for long-term stability and growth that pays for our NHS, finds jobs for young people, and provides a safety net for older people all whilst making our country one of the most prosperous in the world.
Below is a summary of some of the main points.
Corporation tax
As planned, from April 2023 the corporation tax rate will increase from 19% to 25% for companies with profits of over £250,000. Small companies with profits up to £50,000 will continue to pay corporation tax at 19%. Those companies with profits the upper and lower thresholds will receive marginal relief resulting in a gradual increase in the effective corporation tax rate, depending on their level of profits.
‘Full expensing’ deduction
To replace the super-deduction, a new ‘Full Expensing’ deduction is announced from 1 April 2023 until 31 March 2026. The relief allows companies to claim 100% first-year deduction from profit before tax (50% for special pool rate) on qualifying new main-rate plant and machinery investments.
The Annual Investment Allowance remains at £1m
Research and development
For expenditure incurred on or after 1 April 2023, research and development (R&D) tax reliefs will be changed as follows:
- The small and medium-sized enterprises (SME) additional deduction will decrease from 130% to 86%
- The SME credit rate will decrease from 14.5% to 10%
- R&D expenditure credit rises from 13% to 20% and
- The R&D Intensive SME payable credit is introduced from April 2023 at the rate of 14.5%. A company is considered R&D intensive where its qualifying R&D expenditure is worth 40% or more of its total expenditure. These 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.
Pensions reform
The lifetime pension allowance charge will be removed from April 2023 before the allowance is abolished entirely from April 2024. The pension annual allowance is increased from £40,000 to £60,000 from April 2023. Money purchase annual allowance is increased from £4,000 to £10,000, which applies if you have already started drawing a pension.
| Income tax rates and allowances |
||
| Income tax rates: England, Wales and Northern Ireland (non-dividend income) |
2023/24 | 2022/23 |
| 0% starting rate for savings only | Up to £5,000 | Up to £5,000 |
| 20% basic rate tax | £12,571-£50,270 | £12,571-£50,270 |
| 40% higher rate tax | £50,271-£125,140 | £50,271-£150,000 |
| 45% additional rate tax | Above £125,140 | Above £150,000 |
National insurance
The national insurance thresholds for all classes will be maintained until April 2028 at the current level. The employment allowance is set to the current level of £5,000.
National Living Wage
From 1 April 2023, the National Living Wage is increased to £10.42 an hour, for those aged 23 and over.
Dividend allowance
Dividend allowance is reduced from £2,000 to £1,000 from April 2023 and to £500 from April 2024. The threshold of £2,000 has been in place since April 2018. From 6 April 2022, dividends are taxed at 8.75% (basic rate), 33.75% (higher rate) and 39.35% (additional rate).
Capital gains tax: reduce the annual exempt amount
As previously announced, the annual exemption amount for capital gains tax for individuals will change, from £12,300 to £6,000 from April 2023, then £3,000 from April 2024.
SDLT
Stamp duty land tax (SDLT) cuts for England and Northern Ireland will remain in place until 31 March 2025. From 23 September 2022, the nil-rate threshold of SDLT was increased from £125,000 to £250,000 for all purchasers of residential property in England and Northern Ireland and the nil-rate threshold paid by first-time buyers increased from £300,000 to £425,000.
As a reminder, the maximum purchase price for which First Time Buyers’ Relief can be claimed was increased from £500,000 to £625,000. This will be a temporary SDLT reduction, which will remain in place only until 31 March 2025.
Help with childcare
A phased package of support has been announced for help with childcare costs for accessing 30 hours of childcare for children over nine months old. The free childcare will be available for 38 weeks of the year.
Government grants to install electric vehicle charge points
You can potentially claim 100% of the costs of installing an electric vehicle charging point as a capital allowance. The government extended the 100% First Year Allowance for electric vehicle charge points to 31 March 2025 for corporation tax purposes and 5 April 2025 for income tax purposes.
Help for energy costs
The current Energy Price Guarantee which provided support for household energy bills until 31 March 2023 will now be extended to 30 June 2023.
Support for businesses is available and further detail about eligibility can be found at:
Energy Bill Relief Scheme: help for businesses and other non-domestic customers – GOV.UK (www.gov.uk)
