Spring Budget 2023
Spring Budget 2023
The Chancellor, Jeremy Hunt made his Spring Budget 2023 speech on Wednesday 15 March.
The highlights from the budget are:
Income tax rates and allowances
No changes were announced: these remained locked until 2028
There are increases to the blind persons and married couples allowances, as already announced in last Autumn
Pensions
It is proposed that from April 2023:
The lifetime allowance limit is abolished.
The maximum pensions tax-free lump sum is frozen at 25% of the current lifetime allowance (LTA) limit.
The annual allowance is increased to £60,000 per year with increases to the tapered annual allowance and adjusted income level.
The proposed measures mean that from April 2023 no taxpayer should face a lifetime allowance charge on their pension pot.
From April 2024:
There is a previously announced measure placing a duty on HMRC to make top-up payments to individuals who save into an occupational pension under net pay arrangements, if their total taxable income is below the personal allowance.
Capital Allowances
From April 2023:
Companies incurring qualifying expenditure on new plant and machinery before 1 April 2026 will be able to claim either a 100% or 50% First Year Allowance (FYA). The 100% allowance is known as 'full expensing'.
The temporary £1m Annual Investment Allowance (AIA) limit is made permanent.
100% FYAs on electric vehicle charge-points are extended to 31 March 2025 for Corporation Tax purposes and 5 April 2025 for Income Tax purposes.
Investment zones
From Royal Assent of Spring Finance Bill 2023 special tax sites in or connected with Investment Zones will now be able to benefit from a package of tax reliefs including:
Stamp Duty Land Tax (SDLT) relief.
Enhanced capital allowances of 100% for plant and machinery.
Enhanced structures and buildings allowances.
Relief from secondary Class 1 National Insurance contributions (Employer NICs) for eligible employers on the earnings of eligible employees up to £25,000 per annum.
Relief from Business rates.
Self Employed taxpayers
Extending the Cash Basis: a consultation
HMRC have launched a new consultation on Extending the Cash basis for Self Employed taxpayers.
The consultation, published with the Budget 2023 documents asks for your views on options to extend and simplify the Self-employed Cash Basis, a simplified way of calculating taxable profits for Income Tax purposes.
The proposals mainly affect businesses currently eligible for the cash basis with turnover under £300,000: however one proposals is to extend the cash basis to more sizeable business.
Farmers: Taxation of Farming Lump Sum Exit Scheme payments
From 6 April 2022:
Legislation will be included in Spring Finance Bill 2023 to provide that payments received under the Lump Sum Exit Scheme (LSES) which relate to an eligible claim are neither receipts of a trade nor miscellaneous income.
Social Security Benefits & tax
Increase in Qualifying Care Relief
From April 2023
This measure increases the amount of the Income Tax qualifying care relief available to foster carers and shared lives carers, and automatically increases the relief each year in line with inflation.
See Budget 2023: Social security benefits & tax
Free Childcare
From April 2024:
Children from the age of two will be entitled to 15 hours of free childcare.
Children from 3 to 4 will be entitled to 15 hours of childcare, which can be increased to 30 if the parents are eligible (see bleow).
From September 2024:
Children from the age of 9 months will be entitled to 15 hours of free childcare.
Children from 3 to 4 will be entitled to 15 hours of childcare, which can be increased to 30 if the parents are eligible (see bleow).
From September 2025:
Working parents of all children over 9 months but under 5 will be entitled to 15 hours of free childcare, this can be increased to 30 if the parents are eligible (see bleow).
It is worth noting that the free hours of childcare are for 38 weeks of the year.
Employees: Share Option schemes
Enterprise Management Incentives (EMI)
From 6 April 2023
Simplification measures will remove the requirements for the company to a) set out within the EMI option agreement the details of any restrictions on the shares to be acquired under the option, and b) to declare that an employee has signed a working time declaration when they are issued an EMI option. It does not remove the working time requirement itself.
From 6 April 2024
The deadline for notifying an EMI option will be extended from 92 days following grant to the 6 July following the end of the tax year. This will be legislated separately and the impacts will be set out at that point.
Company Share Options Plans (CSOPS)
Both measures were as announced last Autumn. additionally, its noted that changes to the share options limit will now be achievable through secondary rather than primary legislation.
From 6 April 2023
Qualifying companies will be able to issue up to £60,000 of CSOP options to employees. The current limit is £30,000.
Currently where a company has more than one class of ordinary share capital, shares included in a Company Share Option Plan scheme must be from a share class that is ‘worth having’
Capital Gains Tax (CGT)
No further announcements were made in respect of CGT rates and allowances since last Autumn where the following allowances were set:
From April 2023
Finance Act 2023 reduces the Annual Exemption from £12,300 to £6,000 for individuals and personal representatives, and from £6,150 to £3,000 for most trustees.
The proceeds reporting limit for CGT is fixed at £50,000.
Trusts & Estates
From 6 April 2024:
Trusts and estates with income up to £500 will not pay any tax on that income as it arises.
The default basic rate and dividend ordinary rates of tax that apply to the first £1,000 of discretionary trust income will be removed.
Beneficiaries of UK estates receiving distributions of income within the above £500 limit will not pay tax on that income.
Research & Development (R&D)
Additional Tax Relief for R&D intensive SMEs
From 1 April 2023:
An increased tax credit of 14.5% will be available for SMEs that are R&D intensive.
An R&D intensive company is one with a qualifying expenditure to total (tax adjusted) expenditure (intensity) ratio of 40% or more.
Seed Enterprise Investment Scheme
For shares issued on or after 6 April 2023 (and as previously announced in the Autumn Statement 2022):
The company investment limit will increase from £150,000 to £250,000.
The gross asset limit will be increased from £200,000 to £350,000 and the trading time limit increased from two to three years.
The individual annual investor limit will be raised from £100,000 to £200,000.
VAT
Measures announced in respect of VAT include:
Changes to VAT accounting rules for Drink Deposit Return Schemes.
Proposals to digitise the DIY Housebuilders Scheme and extend the time limit to six months from completion of the build.
Technical changes to late payment interest, penalties and repayment interest affecting commencement dates under the new VAT interest and penalty rules in certain circumstances.
Extension of the VAT exemption for healthcare to include services carried out by staff directly supervised by UK registered pharmacists.
Extension of the zero rate of VAT for certain other medicines dispensed on prescription.
Tax Administration & Assessment
Tax refunds
From 15 March 2023
A taxpayer is not longer able to legally assign to a third party their income tax repayment, or their right to an income tax repayment.
The effect of this measure is that assignments of income tax repayments will have no legal effect and the repayment will remain the property of the taxpayer.
Cryptoassets reporting
From 6 April 2024
Changes to the Self Assessment tax return forms SA108 (Capital gains summary page) and SA905 (Trust and estate capital gains page) requiring amounts in respect of cryptoassets to be separately identified.
The changes will be introduced on the forms for tax year 2024 to 2025.
The government will double the maximum sentences for the most egregious forms of tax fraud from 7 to 14 years