Changes to watch out for from April 2023
Corporation Tax
From 1 April 2023, the main rate of Corporation Tax will rise to 25% for companies with profits over £250k pa.
Companies with profits below £50k will continue to pay Corporation Tax at the current rate of 19%.
Any companies with profits between £50k and £250k will pay Corporation Tax at the main rate of 25% but this will be reduced by ‘marginal relief’. This simply means that if a company’s profit is between £50k and £250k, the Corporation Tax rate will increase on a sliding scale between 19% and 25%.
Personal Tax
The personal tax allowance will remain unchanged at £12,570 for 2023-24 and the personal tax and higher rate thresholds will remain unchanged.
However, from April 2023, the additional rate threshold will be reduced from £150k to £125,140. This means that from April 2023, any personal income which exceeds £125,140 will be subject to tax at the additional tax rate of 45%.
Dividend Allowance
The tax free dividend allowance will be reduced from £2k to just £1k from April 2023.
It is expected that the dividend allowance will be further reduced to just £500 from April 2024.
Capital Gains Tax
The annual exempt allowance will be reduced from the current £12.3k to just £6k from April 2023.
It is expected that the annual exempt allowance will be further reduced to just £3k from April 2024.
Making Tax Digital
One good piece of news is that the long awaited introduction of Making Tax Digital (MTD) for landlords and the self employed has been deferred again.
It is not expected that MTD for landlords and the self employed will commence until April 2026, at the earliest!