- The Office for Budget Responsibility has predicted that the UK will avoid recession in 2023, but the economy will shrink by 0.2%.
- The predicted growth is; 1.8% for next year, 2.5% in 2025, 2.1% in 2026.
- The inflation rate in the UK is predicted to fall to 2.9% by the end of 2023, down from 10.7% in the final 3 months of 2022.
- The maximum amount that individuals can pay into their pensions (annually) from 6 April 2023 will increase from £40,000 to £60,000.
- The pensions lifetime allowance (LTA) will be abolished.
- From April 2023 the capital allowances rules will allow for a limited “full expensing” regime.
- In addition to full expensing, the annual investment allowance will be “permanently” set at £1m.
- The predicted growth is; 1.8% for next year, 2.5% in 2025, 2.1% in 2026.
- The inflation rate in the UK is predicted to fall to 2.9% by the end of 2023, down from 10.7% in the final 3 months of 2022.
- The government announced a package of measures intended to simplify customs import and export processes for traders.
- Personal tax thresholds: ie personal allowance, basic and higher-rate thresholds for income tax – are maintained until April 2028 at a current level of £12,570 and £50,270. The additional rate threshold is reduced from £150,000 to £125,140 from 6 April 2023.
- Personal allowance for higher rates – 2023/24: Where annual income exceeds £100,000, personal allowance is lost at a rate of £1 for every £2 of income above £100,000. This is the threshold where the entire personal allowance is lost. The loss of the personal allowance means a person is taxed at 40% on the additional £2 of income, and they also pay an extra 40% on the £1 of personal allowance lost. This results in a marginal rate of 60%, which continues up to £125,140 (£100,000 + (£12,570 x 2)). At the £125,140 point the entire personal allowance has been lost.
- National insurance: The national insurance thresholds for all classes will be maintained until April 2028 at the current level. The employment allowance is set to the current level of £5,000.
- Dividend allowance: Dividend allowance is reduced from £2,000 to £1,000 from April 2023 and to £500 from April 2024. The threshold of £2,000 has been in place since April 2018. From 6 April 2022, dividends are taxed at 8.75% (basic rate), 33.75% (higher rate) and 39.35% (additional rate).
- Capital gains tax – reduce the annual exempt amount: As previously announced, the annual exemption amount for capital gains tax for individuals will change, from £12,300 to £6,000 from April 2023, then £3,000 from April 2024.
- Pensions reform: The lifetime pension allowance charge will be removed from April 2023 before the allowance is abolished entirely from April 2024. The pension annual allowance is increased from £40,000 to £60,000 from April 2023. Money purchase annual allowance is increased from £4,000 to £10,000, which applies if you have already started drawing a pension.
- Corporation tax: From April 2023, the planned increase in the corporation tax rate to 25% for companies with over £250,000 in profits will go ahead. Small companies with profits up to £50,000 will continue to pay corporation tax at 19%. Companies with profits between £50,000 and £250,000 will pay tax at the main rate reduced by a marginal relief providing a gradual increase in the effective corporation tax rate.
- Annual Investment Allowances: Annual Investment Allowance was previously confirmed at a permanent rate of £1m from April 2023.
- ‘Full expensing’ deduction: In order to replace super-deduction, a new ‘Full Expensing’ deduction is announced from 1 April 2023 until 31 March 2026. The relief allows companies to claim 100% first-year deduction from profit before tax (50% for special pool rate) on qualifying new main-rate plant and machinery investments.
- VAT: No further changes to the VAT thresholds have been announced, and the VAT registration and deregistration thresholds at £85,000 will not change for a further period of two years from 1 April 2024.
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Latest news & updates
From the 2023/24 tax year, the self-assessment (SA) threshold for individuals who are taxed solely through PAYE will increase to £150k.
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UK corporation tax increase from 19% to 25% from April 2023, affecting companies with profits of £250,000 and over.
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End of Paper SA Returns: HMRC Contacting Paper Filers to inform them that they will need to phone HMRC to receive paper forms.
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Spring Budget includes significant pension reforms, increasing the annual allowance to £60,000 and abolishing the pension LTA.
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