For small business and most people, there really wasn’t much to write home about with last week’s budget. Most of the important measures were announced last year as part of the Autumn Statement. So what did we get from the Spring 2023 Budget?
This simply means that there are unlimited first year capital allowances (companies only) which only matters if you spend more than £1 million a year on qualifying capital aka fixed assets. NEXT!
The lifetime allowance has been abolished with effect from 6 April 2023 but the 25% tax-free drawdown remains limited to the current £1,073,100 lifetime limit.
The most interesting part for high earners is the increase to the annual allowance from £40,000 to £60,000, coupled with the increase in adjusted income from £240K to £260K for those who have to consider tapering. The threshold income remains at £200K though. The minimum annual allowance for those who earn enough that their annual allowance is tapered has gone back to £10,000 (it was pared back to £4,000 for the last couple of years).
Oh and the maximum sentence for tax fraud has gone up from 7 to 14 years!
The Autumn Statement set out the following:
- Freezing of personal tax thresholds and rates until 2028
- Bringing the additional rate threshold down to £125,140 from £150,000
- Dividend tax rates staying the same (with the 1.25% increase from 2022-23)
- Dividend 0% allowance reduced from £2,000 to £1,000 from 6 April 2023
- Increases to Class 2 and 3 National Insurance
- Capital gains annual exemption reducing from £12,300 to £6,000 from 6 April 2023
- Extension of period married people (and those in a civil partnership) have to divide up their joint assets without paying capital gains tax*
- Benefit-in-kind values for cars and vans to rise in line with inflation
- Companies to pay tax at different rates according to their profits (19% up to £50K and 25% over £250K with a sliding scale for profits between £50K and £250K
*this was a rather ridiculous rule giving people only until the end of the tax year in which they separated to sort out their financial affairs – anyone who has been through this knows that this was almost impossible so the extension to 3 years is a good thing
Do you feel like you have a solid grasp of the impact on you of the 2022 Autumn Statement or 2023 Budget? If you’d like an accountant who can help you to maximise the reliefs and understand the changes, get in touch with Composure today.