As we were?

Whilst the media have reported many of the changes announced by both the new and former Chancellors we appreciate it has been difficult to keep up with exactly what is happening and how this affects businesses and individuals. In order to provide some clarity we have pulled together a few key tax issues as they currently stand.

Corporation Tax

The decision to scrap planned increases in Corporation Tax has been reversed.

As previously reported, the rate of corporation tax will therefore increase to 25% from 1 April 2023, affecting companies with profits of £250,000 and over. Small companies with profits up to £50,000 will continue to pay corporation tax at 19% and those companies with profits between these two figures being subject to a tapered rate.

Annual Investment Allowance

One area of tax outlined in the Governments growth plan that remains in place is the permanent £1m annual investment allowance threshold. This follows a number of temporary extensions up to this level over the past few years.

As such, a business that invests up to £1m in qualifying plant and machinery can offset the spend against taxable profits in the year of acquisition. Amounts over this threshold will continue to attract tax relief by way of writing down allowances.

National Insurance

Reversal of the additional 1.25% national insurance contribution rate increase from 6 November 2022 and the abolition of the Health and Social Care Levy that had been due to come into force from April 2023 will continue as planned.

Personal Tax

• Basic Rate
  
  The Chancellor confirmed that the basic rate of income tax will remain at 20%. At the mini-budget announcement, the planned cut to the basic rate of income tax to 19% was brought forward from April 2024 to April 2023.
  
  The chancellor explained that the existing rate of 20% would remain indefinitely and only reduce when “conditions allow and change is affordable”.
  
• Additional Rate
  
  The former Chancellor confirmed earlier this month that Government will not be proceeding with abolishment of the 45% income tax rate, as originally announced in September.
  
  The policy was branded ‘a distraction’ from the government’s wider Growth Plan and would have resulted in an income tax cut for individuals earning over £150,000 from 6 April 2023.

Dividend tax

The 1.25% increase in dividend tax rates that was introduced alongside the increase in national insurance contributions rates from April 2022 will remain. Dividend tax rates will no longer be cut from April 2023.

Off-Payroll Working

Reforms to the off-payroll working rules issued in 2017 and 2021 will remain in place despite a plan for them to be repealed from April 2023.

There have been many calls from industry bodies to overhaul this confusing and often subjective area of tax.

Stamp Duty

The extension of the nil rate stamp duty land tax (SDLT) threshold for residential properties in England and Northern Ireland>>> from £125,000 to £250,000 remains in place.

In summary, following a whole raft of planned tax cuts a few weeks ago, most have now been reversed and the scope of the Energy Price Guarantee has been reduced to April 2023. As ever it is always advisable to speak with your accountant about how these issues affect you and your business. Forrester Boyd can provide tailored tax advice and guidance to assist you through these uncertain times. Contact us for further guidance and support>>>.