This was a quiet budget for tax, but we set out below the main points arising, including confirmation of tax rises announced in the Spring.
INCREASE IN CORPORATION TAX RATES REAFFIRMED
The intention to increase the corporation tax rate from 19% to 25% announced in the Spring budget was reaffirmed, despite unexpected improvements to the economy. This remains the government’s main tool to cover the cost of the pandemic.
This measure will apply from 1 April 2023 to profits over £250,000. A small profits rate will also be introduced for companies with profits of £50,000 or less so that they 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.
DON’T FORGET THE SUPER DEDUCTION
Also announced in the Spring was the above new deduction which allows a write off against taxable profits at 130% of the amount paid for new plant and equipment, e.g. machinery, commercial vehicles, office equipment etc. Cars are specifically excluded. This applies to purchases of plant and equipment from 1 April 2021 to 31 March 2023.
This is an advance incentive to invest in equipment for your business which increases the effective rate of tax relief in a company from 19% to 25% of the amount spent.
EXTENSION OF THE £1 MILLION LIMIT FOR 100% RELIEF ON CAPITAL EXPENDITURE
Due to expire, the £1m limit on capital expenditure qualifying for Annual Investment Allowance has been extended to March 2023 for items not qualifying for the super deduction.
NO CHANGES TO INCOME TAX, CAPITAL GAINS TAX OR INHERITANCE TAX RATES OR ALLOWANCES
Pre budget speculation concerning potential increases in the above rates fortunately proved unfounded.
DEADLINE FOR REPORTING GAINS ON RESIDENTIAL PROPERTY EXTENDED FROM 30 TO 60 DAYS
– for sales completed after budget day
R&D TAX RELIEFS TO BE REFORMED
To include expenditure on data and cloud computing with measures introduced to support innovation in the UK, but relief for overseas sales will be removed.
CHANGES TO DIVIDEND TAX RATES FROM 6 APRIL 2022 CONFIRMED
Rates increase by 1.25% to 8.75% for the basic rate taxpayer and from 32.5% to 33.75% and 38.1% to 39.35% for those paying at the higher and additional rates.
Another measure to help pay for the cost of the pandemic.
FUTURE CHANGE TO THE BASIS PERIODS FOR SOLE TRADERS AND PARTNERSHIPS TAX
So unincorporated entities effective for 2024/25 means that regardless of the accounting date the business’s profit or loss will be that arising in the tax year
NO ANNOUNCEMENTS ON PENSIONS LIFETIME OR ANNUAL ALLOWANCES
INCREASE IN TAXABLE BENEFITS ON VANS AND CARS
From 6 April 2022, the flat-rate van benefit charge will increase to £3,600; the multiplier for the car fuel benefit will increase to £25,300 and the flat-rate van fuel benefit charge will increase to £688.
BUSINESS RATES CUT FOR HOSPITALITY, LEISURE & RETAIL
As the hospitality industry continues to recover from the pandemic, the Chancellor announced significant discounts on business rates for specific sectors for the next 18 months.
The government intends that over 90% of retail, hospitality and leisure groups will receive at least a 50% reduction in their business rates bills in 2022-23, when taken together with small business rates relief.
FURTHER TAX RELIEF FOR CULTURAL AND CREATIVE INDUSTRIES
The Chancellor has announced the tax relief of up to 50% for theatres, galleries, and other cultural organisations worth almost £250m
Privacy & Cookies Policy
Necessary cookies are absolutely essential for the website to function properly. This category only includes cookies that ensures basic functionalities and security features of the website. These cookies do not store any personal information.
Any cookies that may not be particularly necessary for the website to function and is used specifically to collect user personal data via analytics, ads, other embedded contents are termed as non-necessary cookies. It is mandatory to procure user consent prior to running these cookies on your website.