Here are some of the key points from the budget:
Income Tax
- From 6 April 2023, the point at which individuals pay the additional rate is still planed to be lowered from £150,000 to £125,140.
- The personal allowance and higher rate threshold were already fixed until April 2026 and this will be maintained for a further two years, until April 2028. So your personal allowance will remain at £12,570 until April 2028 and a higher rate threshold of £50,270.
National Insurance (NIC)
- The primary threshold and class 2 lower profits threshold was increased from July 2022 to align with the personal allowance (for employees) and is planned to be maintained until April 2028, so £12,570 and £50,270.
- For employer the level at which they start to pay Class 1 NICs for their employees will be fixed at £9,100 until April 2028.
- Small profit threshold will be increased from £6,396 to £6,726 in 2023/24
- Class 2 NICs rate for 2023/24 will be £3.45 per week.
- Class 4 NICs rate for 2023/24 will be £17.45
Dividends
- The government has confirmed that, from April 2023, the rates of taxation on dividend income will remain as follows:
– the dividend ordinary rate – 8.75%
– the dividend upper rate – 33.75%
– the dividend additional rate – 39.35%.
- As corporation tax due on directors’ overdrawn loan accounts is paid at the dividend upper rate, this will also remain at 33.75%.
- Dividend Allowance will be reduced from £2,000 to £1,000 from April 2023 and to £500 from April 2024.
Capital Gains Tax
- Capital gains tax annual exempt amount will be reduced from £12,300 to £6,000 from April 2023 and to £3,000 from April 2024.
Pension
- With effect from April 2023 the annual allowance will be increased form £40,000 to £60,000.
- The money purchase annual allowance will increase from £4,000 to £10,000.
- The tapered annual allowance will increase form £240,000 to £260,000.
Corporation Tax
- The expected increase in Corporation Tax will go ahead and increase to 25% for companies with profits over £250,000.
- The 19% rate will become a small profits rate by by companies with profits of £50,000 or less.
- Companies with profits between £50,001 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.
Capital Allowances and reliefs
- The super-deduction allowance will be replaced with 100% full expensing, giving a company 100% in the first year of qualifying assets and be effective on or after 1 April 2023 but is only avaiable to incorporated companies.
- Annual Investment Allowance will be extended permanently at its current level of £1 million.
- The 100% first year allowance for electric vehicle charge points has been extended to 31 March 2025 for corporation tax purposes and 5 April 2025 for income tax purposes.
VAT
- The VAT registration and deregistration thresholds will not change for a further period of two years from 1 April 2024, staying at £85,000 and £83,000 respectively.
Employers Allowance
- Employers allowance is to remain at £5,000
National Living Wage and National Minimum Wage
- The government will increase the National Living Wage (NLW) and National Minimum Wage from 1 April 2023 as follows:
• the rate for 23 year olds and over to £10.42 an hour
• the rate for 21-22 year olds to £10.18 an hour
• the rate for 18-20 year olds to £7.49 an hour
• the rate for 16-17 year olds to £5.28 an hour and
• the apprentice rate to £5.28 an hour
This is meant as guidance only. No responsibility for loss occurred by any persons acting/refraining from action as a result of this information can be accepted by the Nicholson & Co (Sheffield) Ltd. It is always advisable to seek advice first.