The Chancellor, Jeremy Hunt made his Spring Budget 2023 speech on Wednesday 15 March.
The devil is often in the detail which the list below further highlights.
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 last Autumn.
Energy Price Guarantee
The domestic Energy Price Guarantee will be extended at its current level of £2,500 for another three months until June 2023.
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.
In addition, there will be changes to the taxation of serious ill-health lump sum (SIHLS), defined benefits lump sum death benefit (DBLSDB), and uncrystallised funds lump sum death benefit (UFLSDB), which are currently subject to a 55% tax charge above the LTA, to ensure that they are instead taxed at an individual’s marginal tax rate.
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.
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 below).
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 below).
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 below).
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) 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.
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.
Completion of unconditional contracts
From April 2023:
Certain time limits will be extended where there has been a transfer under an unconditional contract that completes after the end of the tax period of the disposal.
LLPs and Scottish partnerships disposing of joint interests in land
From 6 April 2023:
Roll-over Relief and Private Residence Relief will be available for Limited Liability Partnerships and Scottish Partnerships as it would be if the land was held by the individual partners.
Transfer of assets between spouses and civil partners in the process of separating
From 6 April 2023:
Separating spouses or civil partners be given up to three years after the year they cease to live together in which to make no gain/no loss transfers of assets.
Companies
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 to loss-making 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.
Reform of Research & Development Relief
Previously announced measures have been confirmed:
From 1 April 2023:
The scope of qualifying expenditure will be extended to include datasets and cloud computing.
In an attempt to combat abuse, companies will need to inform HMRC in advance if they intend to make an R&D claim.
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 no longer able to legally assign their income tax repayment to a third party, 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 2024-25.
