Most tax rates and allowances were announced in advance at the Autumn Statement, so this Budget focused more on spending than on tax. After a rollercoaster of three fiscal statements in 2022, there were not many surprises in this budget.
The Chancellor emphasised that this was a ‘budget for long term, sustainable growth’, starting with the prediction from the Office for Budget Responsibility that we will avoid a recession in 2023, but that there is unlikely to be any economic growth this year.
The key points of the budget are summarised below:
- 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
- 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
- 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
If you have any questions, or would like to know how this will impact you, please give us a call on 0207 384 2647.