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On 15th March, the Chancellor, Jeremy Hunt introduced the government's new fiscal plan. After a turbulent tax year for UK businesses, the Chancellor's statement focused on fiscal measures to help reduce the country's current staffing challenges while boosting economic growth, innovation and investment.
Here is a summary of the new measures businesses should be aware of.
In 2021, the then chancellor, Rishi Sunak announced an increase to the standard rate of Corporation Tax, from 1st April 2023.
Last week, Jeremy Hunt confirmed that the planned increase from 19% to 25%, will come into force starting April 2023.
It's important to note that not all companies will be affected by this Corporation Tax rate, increase.
• Annual revenue of up to £50,000 will continue to be charged at the lower, current rate of 19%.
• Annual earnings of more than £250,000, will be taxed at 25%.
• Companies with annual earnings of more than £50,000 and less than £250,000 will also be charged the new 25% Corporation Tax rate, however, they'll be able to claim back marginal relief in accordance with their earnings.
In April 2021 the Government introduced the Super-Deduction scheme, to increase companies' investment in qualifying new plant and machinery. Under that scheme, businesses could deduct some, all or even more than the cost of an item from its profits, before paying their Corporation Tax.
From April 2023, the Super-Deduction scheme will be replaced with the Full Expensing scheme, which allows companies to deduct 100% capital allowances for qualifying plant and machinery. (instead of 130% under the Super-Deduction scheme).
In addition, the Government will introduce a Special-Rate scheme of 50% first-year allowances.
The Chancellor has also announced that the 100% allowance scheme for electric cars and cars with zero CO2 emissions will continue until 31st March 2025 for Corporation-Tax payers, and 5 April 2025 for Income-Tax payers.
In a bid to increase the number of parents going back to work and alleviate some of the current strains in the labour market, the Government has expanded its 30 Hours Free Childcare scheme to include preschool services from ages 9 months to 5 years - The new 30 hours scheme is expected to be implemented by 2025.
From April 2023, a new research & development incentive will be introduced with a higher rate of relief, for loss-making SME companies.
Eligible companies with R&D expenditure of 40% and above could claim back a tax credit of 27p for every £1 of qualifying R&D costs, through their Corporation Tax bill.
Further details about the new R&D incentive scheme, are available here.
12 low-tax investment Zones will be introduced across the UK.
Each will receive £80M of support from the government over a period of 5 years, along with additional tax benefits, such as enhanced Capital Allowances, Structures and Buildings Allowance, Stamp Duty Land Tax and Business Rates reliefs.
Currently, 8 Investment zones have been announced across England:
• West Midlands
• Greater Manchester
• The North-east
• South Yorkshire
• West Yorkshire
• East Midlands
The maximum sentence for severe tax fraud cases will increase to 14 years (previously 7 years).
Tax relief for pension savings
• From April 2023, the tax-free, annual contribution allowance, will be raised from £40K to £60K.
• If you have already started drawing money out of your pension pot, from April 2023, your annual saving allowance under the Money Purchase scheme will increase from £4,000 to £10,000.
Fuel duty cut
The 5p cut, announced last year would remain for an additional 12 months.
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