Corporation tax
The Chancellor has confirmed that the corporation tax rate will rise from 19% to 25% in April. However, only businesses with profits over £250,000 will be hit with the full rate of tax. Those with profits between £50,000 and £250,000 can claim marginal relief, while businesses with profits below £50,000 will see no change and will continue to pay 19%.
In the case of associated companies, the upper and lower profit limits will be divided equally among all of the associated companies. These revised limits are also used when calculating any marginal relief. Please get in touch with us if you would like to discuss how this may affect you.
Small business investment allowance and tax boost
The Annual Investment Allowance will increase to £1m for smaller businesses, meaning 99% of businesses can receive 100% tax relief on their qualifying plant and machinery in the year of investment.
The Full Expensing deduction will be available from 1 April 2023 until 31 March 2026 and will allow companies to claim 100% first-year deduction from profit before tax on qualifying main-rate investments into plant and machinery.
Small and medium-sized businesses that spend 40% or more of their total expenditure on R&D will also be able to claim £27 worth of credit for every £100 spent.
Pensions lifetime allowance
The pensions annual tax-free allowance will increase from £40,000 to £60,000, with the Lifetime Allowance, which was previously set at £1.07m, to be removed.
Energy bill support and fuel duty
The Energy Price Guarantee, which caps average annual bills at £2,500, has been extended until June this year, meaning the average family will save £160 on their bills. The "prepayment premium", where customers with prepayment metres pay more than those on direct debit, will also be scrapped from July.
The 5p cut to fuel duty that was due to end this April has been extended by another year.
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Other announcements included changes to disability benefits, sets of measures aimed at over 50s who wish to return to work, a boost to childcare, 12 new investment zones, £1m prize for AI research each year, and cash for local regeneration projects.
Useful factsheets:
Spring Budget on gov.uk