As we enter the new 2023/24 tax year, it’s important for businesses to stay up-to-date with the latest changes to tax rates and regulations. From payroll and NICs to relief on business investment, there are a number of changes that may affect your operations. These will include:
Relief on Business Investment
The super deduction has come to an end, and a new scheme of full expensing has been introduced, which provides companies with 100% first-year relief on qualifying plant and machinery until 31 March 2026. The 50% first-year allowance has also been extended until the same date, which can be claimed on special-rate expenditure.
Payroll and NICs
Payroll and NICs have undergone various changes, including increases to the National Minimum Wage and National Living Wage from 1 April and a reduction in the additional rate threshold for income tax to £125,140. Statutory benefits, such as sick pay and parental pay, have also increased, while the dividend allowance has been reduced from £2,000 to £1,000. It’s worth noting that directors will see a blended rate for the 2022/23 tax year due to changes to National Insurance rates and thresholds.
R&D Relief Changes
Research and Development (R&D) relief changes have also taken effect, with available relief decreasing for the SME R&D scheme and increasing for the RDEC. However, companies that are classified as R&D intensive can still benefit from the original rates of the SME scheme. Furthermore, new requirements for claims are now in place, with businesses required to provide extra information, including details on their qualifying expenditure and descriptions of their R&D work.
Pension Tax Changes
The pensions lifetime allowance has been scrapped altogether, and a new maximum cap of £268,275 (25% of £1,073,100) for the tax-free amount that can be taken as a pension lump sum has been introduced. The annual allowance has also been increased from £40,000 to £60,000, with some additional adjustments taking place in line with this change.
Tax Year Basis Transition
From April 2024, sole traders and partnerships will need to adjust to new rules on their basis period, paying income tax on their profits made in the tax year, rather than in their accounting period. This year, the 2023/24 tax year is a transition period for the change, and businesses with an accounting period ending on dates other than 31 March or 5 April will be taxed on their profits up to the end of their accounting period, plus their profits up to the end of the tax year.
Get in touch
We advise to take advantage of any new opportunities and avoid getting caught out by new requirements. If needed, we can assist with changing accounting dates or any administrative work required to transition to the new tax year basis. Get in touch with us at enquiries@aitaccountants.co.uk
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