March 2023 Newsletter | Cylchlythyr Misol Mawrth 2023
BUDGET SPECIAL
1. What did we know before the Budget (main changes)?
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Income tax personal allowance and higher rate tax threshold frozen at their current level until 2028. Therefore, as wages rise more tax will be paid even if tax rates remain the same.
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Inheritance tax thresholds will also remain at the current rate until 5 April 2028.
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Tax-free dividend allowance will be reduced from £2,000 to £1,000 in April 2023 and halved again to £500 from April 2024. This is likely to lead to more individuals being captured by tax reporting requirements.
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Capital gains tax annual exempt amount of £12,300 will reduce to £6,000 in April 2023 and will halve again to £3,000 from April 2024. This will lead to higher capital gains tax of over £1,000 per annum for anyone selling assets from April 2023.
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The State Pension will increase by 10.1% from April 2023.
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Corporation tax rates will increase from 19% to 25% from April 2023 (with a small profits rate of 19% for companies with profits of less than £50,000 and marginal relief available for companies with profits between £50,000 and £250,000).
2. What was announced on Budget Day?
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The Energy Price Guarantee will be extended for 3 months from April 2023, with typical bills capped at £2,500 a year, in line with the current policy. Additional support will be made available to those on prepayment meters.
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Families on Universal Credit to receive childcare payments upfront instead of in arrears, with the amount of support increased to £951 a month for a one child family.
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Three significant pension changes:
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Annual pensions allowance: the amount that can be paid into a pension each year whilst still receiving tax relief has increased from £40,000 to £60,000 (subject to the usual earnings limits).
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Lifetime pensions allowance: previously, there was a limit of c.£1million on the total value of your pensions at retirement before a pensions tax charge was payable when you retired. This limit has now been abolished.
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Money Purchase annual allowance: if you had started drawing down your pension, you were restricted to only being able to contribute a maximum of £4,000 a year into your pension. This annual limit has now increased to £10,000.
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To encourage business investment, companies will be able to write off the full cost of qualifying plant & machinery against their profits for the next 3 years from 1 April 2023.
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Fuel duty has been frozen, whilst alcohol duty will rise with inflation from August, with additional relief on draught beer sold in pubs.
We will continue to keep you updated on significant tax changes and Government announcements!
