Autumn Budget Unpacked - What's In The Briefcase?
Well, the recent Autumn budget was very interesting, especially compared to previous budgets which have been very dull except for the controversial mini budget a few months ago which I don’t think anyone will forget!
So now the dust has settled, what were the main points from the budget that affect business owners as, to be honest, who wants to know whether beer and fags have gone up? Instead, what we're really interested to know is that the the capital gains tax allowance will be reduced from April 2023 from £12,300 to £6,000. This will affect you if you have any asset - for example, investment property, stock and shares, etc. that has increased in value which you're looking to sell in the foreseeable future, as it would make sense from a tax perspective to see the asset this tax year to take advantage of the higher allowance. Talking about Capital Gains Tax (CGT), they did not change any other rates as expected which is good news, as the tax rates are still lower than the personal tax rates being 10%/20% (basis rate/higher rate) for non-property assets and 18%/28% for property assets.
So what about companies and corporation tax? Well, the 25% new rate will be applicable from April 2023 which makes paying dividends at certain levels not as tax efficient as previously, especially with the new higher earnings threshold of £125,000 whereupon 45% tax will be payable. We will be reviewing all our clients' dividend/salary structures in the new year to ensure any changes are implemented from April 2023 to ensure they are as tax efficient as possible.
So what else caught my eye? Well, as a driver of an electric car, it was interesting to see road tax will be payable from April 2025 and the car benefit tax is being increased over the next few years which was expected. However, with the increases also affecting petrol/diesel cars, it is still very tax efficient to run an electric car through the company...and the new Lotus electric car looks very tempting!
Finally, the only other point to note affects the innovative companies who claim research and developments tax credits as, from April 2023, the enhancement rate is being reduced from 130% to 86% and the tax credit rate (cash refund rate rather than offset against your corporation tax) has also reduced from 14% to 10% - so it's well worth making sure your claim this year is submitted and includes all those R&D costs.
If you are in need of further assistance or answers on how the budget impacts you and your business, please email me at lee.manning@raffingers.co.uk or click here to get in touch.