March 2023- Budget Highlights
The 2023 Budget was announced yesterday and with the government having little room to manoeuvre, there were no great surprises in the statement. The outlook is apparently a bit brighter for the remainder of this year and beyond with inflation expected to fall back to around acceptable levels over the next 12 months. There was also an emphasis on policy changes designed to encourage people back to work to fill the vacancies that have proved difficult to fill since the end of the pandemic and some limited further support to assist people with their energy bills over the next 3 months.
The main bullet points that could directly affect you or your business were as follows:-
- Corporation Tax rates will increase to 25% for larger companies, as put forward last Autumn. There is some marginal relief for companies with profits below £250k and the 19% rate will still be applicable to businesses earning a profit below £50k.
- The Capital Gains Tax threshold will be reduced from £12,300 to £6,000 from April 2023 and further halved to £3,000 from April 2024. The rate at which CGT will be charged has remained unchanged at 18% for basic rate tax payers and 28% for higher rate tax payers.
- Dividend tax free allowance will be reduced from £2k to £1k from April 2023 and the rate of tax payable on dividends will be increased from 7.5% to 8.75% for basic rate tax payers and the rate for higher rate tax payers will also be increased from 32.5% to 33.75%.
- Allowances for contributions to pensions have been increased meaning you can pay more each year into your pension. The lifetime allowance of £1M has also been scrapped.
If you need any further information on any of the detail behind these main changes, please get in touch.
Practice News
The team have worked exceptionally hard over the winter to ensure all personal and company tax returns for 2021-2022 were filed before the respective deadlines. Work has also been completed on rolling forward the client files in advance of the 2022-2023 tax year.
With effect from 1st April 2023, clients can start to hand in their paperwork for the tax year 2022-2023. This would be all sales income, expenses, receipts and bank statements covering 1st April 2022 to 31st March 2023. If you are unsure what is required please give us a call to discuss. There are no downsides to handing in your paperwork as early as possible and you will have the knowledge of knowing what your tax liability will be well in advance of next January when it actually becomes payable. By spreading the workload over April to January, it really helps the practice to manage the turnaround times over a 10 month period rather than dealing with a large number of returns as the tax filing deadline comes around. If you are a business that carries stock or work in progress, please remember to take a stock valuation on or around the 31st March 2023 and include this with your paperwork.
Staff continue to undertake various professional exams giving us more cover and experience which will be invaluable given the growth in the business over the past few years. The office remains very flexible with its opening hours and we are happy to see clients at a time that suits you, including evenings and weekends. Furthermore, unlike most accounting firms, our policy is not to charge for general advice or for phone calls and trust this commitment to our clients is appreciated.
The practice has maintained the same hourly rate for the past 3 years and this was a conscientious decision to help our clients through the pandemic and with their own business recovery through the post covid years. Unfortunately, the inflationary pressures on wages and compliance costs, as well as the well publicised utility cost increases, means it is simply not practical for our own practice to go into another tax year with the same hourly rate for a fourth consecutive year. There will therefore be a small increase in our hourly charge out rate which will add between £20 – £40 to the total cost of an average set of accounts and annual tax return for a small sole trader business. This small price increase will be held, not only for this coming year, but also for the following tax year as well. We have always been committed to keeping our service affordable and being upfront regarding our hourly rate. I am personally committed to being transparent about any increase in fees and have pledged never to apply an automatic annual uplift, which is sadly the industry standard.
For clients with regular VAT work or payrolls who pay by monthly standing order, we will send you out a personalised quote for the coming tax year in the next few days.
I trust our clients understand this decision and fully support it, as it will allow us to continue to deliver the same high standards and personal service we have become known for.
I will personally be looking to get out and about more to meet our clients in the coming months, and I am particularly looking forward to meeting our new clients who are coming on board from April. If you wish to discuss any aspect of your business or personal tax affairs, please get in touch.
Thanks
Graham Reid
www.grahamreid.co.uk
