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The April 2023 Tax Changes At A Glance

As a new tax year begins, it is important to be aware of the tax changes introduced from April 2023. Our EQ Taxperts have prepared a summary of the key changes that may impact taxpayers.

From 1 April 2023

  • The UK corporation tax rate will increase from 19% to 25% for companies with profits over £250,000.
  • The 130% super-deduction available to companies on new plant and machinery has ended.
  • Companies can now claim 100% of the cost of qualifying new plant and machinery in the year it is incurred until 31 March 2026. (This relief applies to new assets qualifying for main pool allowances, and therefore excludes cars, integral features and other items only qualifying for special pool allowances, and second-hand assets).
  • The 50% first-year allowance (FYA) which allows companies to deduct half the cost of certain special rate expenditure from their profits in the year of purchase, will continue until 31 March 2026.
  • The Annual Investment Allowance (AIA) has been set at £1m on a permanent basis.
  • For qualifying R&D expenditure incurred from 1 April 2023, the additional deduction for SMEs will be reduced from 130% to 86%. In addition, the rate at which losses can be surrendered will reduce from 14.5% to 10%.
  • The rate of R&D Expenditure Credit (RDEC) for large companies increases from 13% to 20%.

From 6 April 2023

  • There will be a reduction to the additional rate threshold from £150,000 to £125,140. This will result in increased income tax for higher earners.
  • The dividend allowance of £2,000 will be cut to £1,000, reducing further to £500 from 6 April 2024.
  • The Capital Gains Tax (CGT) tax free annual exempt amount will be reduced from £12,300 to £6,000, reducing further to £3,000 from 6 April 2024.
  • The CGT tax free annual exempt amount for most trusts will be reduced from £6,150 to £3,000, reducing further to £1,500 from 6 April 2024.
  • Separating spouses and civil partners will now be given up to three years after the year of separation to make no gain/no loss transfers.
  • The pension Annual Allowance (AA) has increased from £40,000 to £60,000. The AA will taper when an individual’s adjusted income exceeds £260,000 (previously £240,000), with the minimum tapered AA increasing from £4,000 to £10,000.
  • The pension Lifetime Allowance Charge has been removed.
  • The Scottish Government previously announced that the higher rate of income tax for non-savings income would increase from 41% to 42%, with the top rate also increasing from 46% to 47%.

For our full analysis of the tax changes announced within the Budget, you can read our Spring Budget Summary here.

It’s important to consider how these changes will impact you. As always, our EQ Taxperts are on hand to offer advice and support. Please get in touch by calling one of our offices or email [email protected].

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