It feels like there is turbulence at every turn right now and that’s particularly true in the world of tax. In my 25 years of working in tax, I have never seen so many significant announcements and proposed changes (some might say U-turns!) in such a short period of time.
We were expecting a “medium term fiscal plan” to be announced by Jeremy Hunt but that has been postponed and instead there will be a detailed Autumn Statement on 17th November. Without wishing to fuel all of the uncertainty out there, I get the impression that we could see wider announcements and surprises ahead…?
Nevertheless, we can only plan for what we know now and it appears most likely that we will see the following:
• An increase in corporation tax for many companies from 19% to 25% from April 2023.
• The basic rate of income tax will remain at 20% indefinitely from April 2023 and for income above £150,000 it will remain at 45%, instead of the reductions previously announced.
• Whilst the NIC rate will reduce by 1.25%, dividend tax rates will retain the 1.25% increase, resulting in rates of 8.75%, 33.75% and 39.35% for basic rate, higher rate and additional rate taxpayers respectively.
• The annual investment allowance (providing 100% tax relief on allowable expenditure) will not reduce to £200,000 and will instead remain at £1m indefinitely.
I hope we will see generous allowances for investment, such as the 130% super deduction which is currently in place until 31 March 2023, and no scaling back of R&D tax relief.
Whenever there are significant tax changes, there are opportunities. For example:
• The timing of capital expenditure.
• Recognition of profits in specific accounting periods.
• Profit extraction.
• Timing of pension contributions to maximise tax relief.
Please feel free to get in touch if you’d like to discuss any of these areas and how they might impact you and your business.
