The sweeping tax reforms and shock announcements of the Kwasi Kwarteng’s mini budget are a distant memory replaced by a somewhat meeker policy making strategy by the current chancellor, Jeremy Hunt. His 2023 spring budget seems to be confirmation of his 2022 autumn statement rather than a platform to announce any major changes. In this post we summarise the key changes announced.
The super-deduction which allowed companies to claim 130% of qualifying capital expenditure will come to an end 31 March 2023. The chancellor has announced that this will be replaced from 1 April 2023 with what he referred to as ‘full expensing’. This means 100% of qualifying capital expenditure can be claimed by companies in the year of expenditure. This will run for three years up until 31 March 2026. This will only apply to companies and not unincorporated businesses such as sole traders who instead can claim the current Annual Investment Allowance for capital expenditure up to £1 million.
The chancellor announced that from 1 April 2023, the rate of relief available for SMEs that are undertaking R&D and are loss making will be increased. If an SMEs expenditure on qualifying R&D makes up at least 40% of their total expenditure the company will be able to obtain an effective credit of 27% of their R&D expenditure.
From April 2023 the amount that individuals can contribute tax free to a pension is being raised from £40,000 to £60,000 per annum. The chancellor also reaffirmed his commitment to abolish the Lifetime Allowance. This is the amount an individual can contribute to a pension in their lifetime without incurring a tax charge. This currently stands at £1,073,100.
The Energy Price Guarantee for households will continue at the current rate of £2,500 until June 2023 increasing to £3,000 from 1 July 2023. The Energy Bills Relief Scheme, which supports businesses is to be replaced by the Energy Bills Discount Scheme until 31 March 2024.
The chancellor announced reforms to the current tax-free childcare regime. This 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 9 months – 3 years old in September 2024.
The coming days and weeks are an important time to consider tax planning opportunities with the end of the tax year looming. It is always a good idea to arrange a meeting with your accountant to review your tax position and suggest ways of reducing your tax burden.
We will be releasing a series of posts covering the main tax changes and planning opportunities coming in to place from April 2023. For more information or to book a free consultation contact us now.
