This article outlines a summary of the key announcements from the UK Government’s Spring Budget 2023.
Individuals
Pensions
- Tax free yearly pension allowance to increase from £40k to £60k from 6 April 2023
- Money purchase annual allowance to increase from £4k to £10k from 6 April 2023
- Lifetime pension allowance (LTA) of £1.07m will be abolished from 6 April 2024
- Lifetime allowance charge will be scrapped from 6 April 2023.
Childcare
- Between 15 and 30 hours a week of funded childcare for children aged 9 months to school age, phased in by September 2025 (England only).
Businesses
Corporation Tax (CT)
- Chancellor confirmed CT rise will increase from 19% to 25% from 1 April 2023
- Small profit rate CT: 19% on companies with profits under £50k
- Main profit rate CT: 25% on companies with profits above £250K
- Marginal relief rates apply between lower and higher CT rates.
Capital Allowances
- Super-deductions will end on 31 March 2023. They will be replaced by Full Expensing (FE) for three years, to 31 March 2026 – providing 100% capital allowances for qualifying plant and machinery
- FE means that companies can deduct 100% of the cost from their profits straight away – rather than more slowly over the life of the asset
- FE also results in a 25p tax save for every £1 they invested, similar to the super-deduction
- The ‘100% first-year allowance’ for qualifying expenditure on electric vehicle charge-point equipment will be extended until 31 March 2025 for corporation tax. For income tax it will be extended until 5 April 2025.
50% First Year Allowance (FYA)
- Moreover, the Government has extended the 50% FYA by three years to 31 March 2026. This allowance gives taxpayers the ability to deduct 50% of the cost of other plant and machinery (special rate assets) from their profits during the year of purchase.
- This allowance includes long life assets such as solar panels and thermal insulation on buildings.
Research & Development (R&D)
- Eligible loss-making companies (who spend at least 40% of their total expenditure on R&D) will be able to claim £27 from HMRC for every £100 of R&D investment, instead of £18.60 for non-R&D intensive loss makers.
Creative Industry Reliefs
- The Government has extended and enhanced the relief for various creative industries.
- Film and TV relief will be merged to create the Audio-Visual Expenditure Credit (AVEC)
- A new relief will be created for video game expenditure Video Games Expenditure Relief (VGEC). VGEC will attract a rate of 34%.
- AVEC will be split in two (high-end TV and film credit rate of 34%, animation and children’s TV 39%).
- AVEC and VGEC will be claimable for accounting periods on or after 1 January 2024.
For more details about the above budget measures visit: https://www.gov.uk/government/publications/spring-budget-2023
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