UK Budget Summary
Last week, Jeremy Hunt, Chancellor of the Exchequer, revealed his first Spring Budget. There was a focus on managing inflation and government debt, encouraging those who have left their jobs to return to the workforce, and increasing business investment.
Here are some of the key measures announced in the Spring Budget that will affect businesses and individuals across the UK:
The Main rate of corporation tax, paid by businesses on taxable profits over £250,000 has been confirmed to increase from 19% to 25%. Companies with profits below £50,000 will pay at 19% and companies with profits between £50,000 and £250,000 will pay at an effective marginal rate that is between 19% and 25% from 1 April 2023.
There are changes to Research and Development Expenditure Credit (RDEC) available and, for non-SME companies, RDEC will be increased from 13% to 20%. For many SME companies, the R&D tax relief enhancement will be reduced from 230% to 186%.
The Annual Investment Allowance (AIA), giving 100% tax relief to unincorporated businesses and companies investing in qualifying plant and machinery, is now permanently set at £1million. The super-deduction, which gives enhanced 130% relief for new qualifying plant and machinery acquired by companies, will end on 31 March 2023.
From 1 April, companies can fully deduct investment in new qualifying plant and machinery to lower their taxable profits. In addition, a 50% first year allowance will be available for integral features.
From 6 April 2023, the Company Share Option Plan (CSOP) employee share options limit will increase from £30,000 to £60,000. Additionally, restrictions on the types of shares eligible for CSOP options will be lifted.
The Government will establish 12 ‘Investment Zones’ across the UK, including a promise to have at least one each in Scotland, Northern Ireland, and Wales.
The Government is increasing the availability of the Seed Enterprise Investment Scheme for start-up companies. The amount of investment that companies will be able to raise under the scheme will increase from £150,000 to £250,000. The gross asset limit will be increased from £200,000 to £350,000 and the investment must be made within 3 years (increased from 2 years) of trade commencing. In a bid to support these changes, the annual investor limit will be doubled to £200,000. The changes take effect from 6th April 2023.
Fuel duty freeze – A freeze on fuel duty and the 5p reduction will remain in place for another year.
Alcohol taxes are to rise in line with inflation from August, with new reliefs for beer, cider and wine sold in pubs.
Pension tax reform – The pensions annual tax-free allowance will increase from £40,000 to £60,000 and the Lifetime Allowance will be abolished to encourage highly skilled individuals to continue working for longer.
The Energy Price Guarantee which caps how much suppliers can charge per unit of energy used will stay in place until June 2023.
30 hours of free childcare to be provided for one and two-year-olds to help parents in England return to work, this will eventually cover all children from the age of nine months. This will be rolled out in stages from April 2024.
Combined with the many mini-budgets and statements made towards the end of 2022, this Budget brings change; good, bad, and often to be determined with time. What is clear is that 2023 remains a year of opportunity and we are here to work alongside you and help you grow!
For further details please see our more detailed Budget Summary released last week and please talk to us if you need guidance on any of the changes announced last week.