The Chancellor Jeremy Hunt has announced his Spring Budget which took place this afternoon. We have highlighted below some of the key tax changes announced by the Chancellor.
Corporation tax
The Chancellor confirmed that he is going ahead with increasing the headline rate of corporation tax from 19% to 25% from April 2023.
Capital allowances
In the 2022 Autumn Statement, the Chancellor announced that the Annual Investment Allowance (AIA) will be permanently set at £1 million from April 2023.
The Spring Budget went a step further by introducing unlimited full expensing for the next three years from 1 April 2023. During this period, companies will be able to write off the full cost of qualifying plant and machinery investment in the year they invest. The government intends to make this measure permanent when fiscal conditions allow.
Pensions
The Chancellor announced that he will increase the pension annual allowance from £40,000 to £60,000. Surprisingly he also announced that the lifetime allowance charge will be removed from April 2023 before the lifetime allowance (currently £1.073,100) is abolished entirely from April 2024.
R&D tax relief
The government will introduce an increased rate of tax relief for loss-making R&D intensive SMEs. Eligible companies will receive £27 from HMRC for every £100 of R&D investment.
Theatre tax relief
The Chancellor is extending the higher rates of Theatre Tax Relief (TTR), Orchestra Tax Relief (OTR) and Museums and Galleries Exhibitions Tax Relief (MGETR) for 2 years. From 1 April 2023, the rates of relief for TTR and MGETR will remain at 45% (for non-touring productions) and 50% (for touring productions). OTR rates will remain at 50%. From 1 April 2025, the rates will be 30% and 35%, and on 1 April 2016, the rates of relief for TTR and MGETR will return to 20% and 25%. The headline rate of OTR will return to 25%.
Investment zones
The Chancellor announced 12 new investment zones including in the East Midlands, Greater Manchester, Liverpool, the North East, South Yorkshire, Tees Valley, West Midlands and West Yorkshire. The investment zones will have access to a single 5 year tax offer matching that in Freeports, consisting of enhanced rates of Capital Allowance, Structures and Buildings Allowance, and relief from SDLT, Business Rates and Employer NICs. They will also have access to grant funding.
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