Upcoming UK Tax Changes from April 2023; What you need to know

The start of a new financial year is fast approaching, and with it comes a raft of tax changes that UK businesses need to be aware of. As a business owner, financial manager, or tax-paying individual, it’s essential to stay on top of these changes to ensure you’re prepared and compliant with the new regulations.

Here’s a summary of the key tax changes coming into effect from April 2023 and some tips to help you navigate them:

Corporation Tax

Effective from 1 April 2023, the corporate tax rates will be adjusted based on a company’s profits. The rates are as follows:

• 19% on profits of £0-£50,000.
• 26.5% marginal rate on profits of £50,001-£250,000.
• 25% on profits over £250,000.

If a company has one or more associated companies during the accounting period, the profit limits are divided by the total number of associated companies. For accounting periods of less than 12 months, the limits are proportionally reduced. The rules around associated companies can be complicated, and associates include close family, business partners and settlements and will trust associates.

It’s essential to understand these rules to avoid any surprises and to make informed decisions regarding your company’s tax planning.

Dividends

From April 2023, the dividend allowance will be reduced from £2,000 to £1,000, and to £500 from April 2024. The tax rate for dividends above the allowance will depend on your income tax band. The following rates apply from 2023:

Basic rate taxpayer	8.75%
Higher rate taxpayer	33.75%
Additional rate taxpayer	39.35%

Capital Gains

The Capital Gains Tax (CGT) exemption will reduce to £6,000 from £12,300 from April 2023 and then to just £3,000 from April 2024. This reduction may affect individuals selling assets liable to CGT.

Research & Development

The rates at which relief on Research and Development is given will change from April 2023. Companies should identify spending before and after this date to gain maximum relief. There are new rules on allowable costs, and companies seeking to submit their first R&D claim for an accounting period beginning on or after 1 April 2023 will be required to notify HMRC.

Capital Allowances

The Super Deduction scheme will end as of 31 March 2023, and companies need to be aware of the changes to the capital allowance regime.

The UK government has introduced significant changes to the capital allowance regime starting from 1 April 2023. The Annual Investment Allowance (AIA) will be set at a permanent rate of £1 million from 1 January 2023. This means that up to the limit of £1 million, companies can claim 100% of expenses relating to certain plant and machinery expenses against profits in the year of expenditure, along with a 50% first-year allowance on integral features or other special rate pool assets.

Get ahead of these upcoming tax changes, speak to Nichols & Co today.

By taking the time to understand these changes and plan accordingly, you can ensure your business is financially prepared for the new tax year.

If you need help or advice, please contact Nichols & Co today. Our team of experts can provide tailored support to help you navigate the changes and make the most of your financial opportunities.