On Wednesday, the Chancellor made his Spring Budget speech, which he described as “A Budget for Growth”.
The package set out a number of tax measures to drive enterprise through boosting investment, support employment by incentivising work and spread the benefits of economic growth everywhere.
The Budget also announced a range of administrative changes to make it easier for small businesses to interact with the tax system and consultations to pave the way for future reform.
The key tax measures announced on Wednesday include:
Business tax
Companies incurring qualifying expenditure on new plant and machinery between 1 April 2023 and 31 March 2026 will be able to claim new temporary first-year allowances. These allowances are: 100% first-year allowance for main pool expenditure and a 50% first-year allowance for special rate pool expenditure.
A new credit rate will be available to R&D intensive loss-making companies whose R&D expenditure is at least 40% of their total expenditure. Qualifying companies will be able to claim a payable credit of 14.5% for qualifying R&D expenditure. The changes will take effect from 1 April 2023.
Following a public consultation, film, TV and video game tax reliefs will be reformed, becoming expenditure credits instead of additional tax deductions from 1 April 2024.
Theatre Tax Relief, Orchestra Tax Relief and Museums and Galleries Exhibitions Tax Relief have been extended by a further 2 years.
Personal tax
The Pensions Life Time Allowance will be abolished and the Pension Annual Allowance will increased from £40,000 to £60,000. These changes will take effect from April 2023.
The government is consulting on reforming the cash basis for the self-employed, a simplified way for over 4 million sole traders to calculate taxable profits for income tax purposes. This consultation will run from 15 March 2023 to 7 June 2023.
Indirect tax
The cut in the rates of Fuel Duty introduced at the Spring Statement in March 2022 will be extended for a further 12 months.
As previously announced, there will be a new structure introduced for alcohol duty, which will be based on the principle of taxation by strength. Duty rates under the revised structure on all alcoholic products produced in, or imported into, the UK are being increased in line with the Retail Price Index (RPI).
The new Draught Relief is being increased from 5% to 9.2% for qualifying beer and cider products, and from 20% to 23% for qualifying wine, spirits based and other fermented products. These changes will take effect from 1 August 2023.
If you would like to discuss any of these in further detail, or would like to understand how these might impact you personally, please do get in touch.