Overview
We have summarised below the key points from Wednesday’s budget. Please also find a more detailed summary and a 2023/24 update tax card. Further details can be seen at https://www.gov.uk/government/publications/spring-budget-2023-overview-of-tax-legislation-and-rates-ootlar/spring-budget-2023-overview-of-tax-legislation-and-rates-ootlar.
We hope you find this useful and we will, of course, be happy to discuss with you any of the points covered in this report and help you adapt and reassess your plans in the light of any legislative changes.
Personal tax
- The main personal tax-free allowance and the 40% tax rate threshold remain frozen at their 2022/23 levels until the end of 2027/28, representing a tax rise where income increases
- The 45% threshold is lowered from £150,000 to £125,140 for 2023/24
- Tax-free dividend allowance falls from £2,000 to £1,000, and CGT annual exempt amount falls from £12,300 to £6,000, for 2023/24
- Pension savings thresholds significantly increased: from 6 April 2023, Annual Allowance rises from £40,000 to £60,000 (with related changes to tapering and Lifetime Allowance Charge is abolished; maximum tax-free lump sum remains 25% of former Lifetime Allowance, i.e. £268,275
- ISA investment limit remains £20,000
- Increase in limit for shares that can be granted under Company Share Ownership Plans confirmed at £60,000
- Small Enterprise Investment Scheme limits increased from 6 April 2023 – maximum for investor is doubled to £200,000
- IHT thresholds and rates unchanged to the end of 2027/28
Business tax
- Confirmation of corporation tax rate increase from 19% to 25% from 1 April 2023 for profits over £250,000
- ‘Super-deduction’ for plant and machinery bought up to 31 March 2023 replaced by 100% first-year allowance for qualifying capital expenditure, without upper limit, for three years from 1 April 2023
- Improvements to Research & Development tax reliefs from 1 April 2023
- Reforms to audio-visual tax reliefs from 1 April 2024
- Announcement of 12 ‘Investment Zones’ to be established throughout UK with incentives for investment and employment
Other measures
- Energy Price Guarantee retained at £2,500 for average household for another 3 months to 1 July 2023
- Significant expansion of free childcare provision to be phased in from April 2024
- Fuel duty frozen, and temporary 5p reduction retained, for another year
- Introduction of ‘Returnerships’ – similar to apprenticeships – to encourage over-50s back into work.