If you’re a contractor, freelancer or small business owner getting ready for the new tax year, the Spring Budget is something to take a keen interest in, as a lot of the announcements will affect you and your business in some way.
Let’s take a look at what those will be for the 2023-24 tax year.
Inflation and the economy
Inflation is set to fall to 2.9% by the end of the year from 10.7%. There is also growth on the cards. After this year the UK economy will grow every single year of the forecast period – by 1.8% in 2024, 2.5% in 2025, 2.1% in 2026 and 1.9% in 2027.
Energy bill support
The Energy Price Guarantee will remain at £2,500 for the typical household for the next three months. This means that the average family will save a further £160 on top of the support measures already in place.
Small Business Investment Capital Expenses
The annual Investment Allowance will remain at £1m. In addition to this, there will be full capital expensing which offers 100% first-year relief on qualifying capital expenditures such as computer equipment and plant and machinery for the next three years.
Tax boost for smaller and medium businesses
The chancellor has announced that small or medium-sized businesses will be able to claim a credit worth £27 for every £100 they spend if they spend 40% or more of their total expenditure on Research and Development.
Corporation tax to increase to 25%
As previously announced, the corporation tax for limited companies will increase from 19% to 25% for companies with taxable profits of £250,000 or more. Small businesses with profits of up to £50,000 will still pay 19% and profits that fall between the two thresholds will be taxed at 26.5%.
Extending a cut to fuel duty
To help households under pressure from living costs, fuel duty will remain frozen and the 5p reduction will be maintained for a further year. This will save the average motorist £100 next year.
Pension allowances
The chancellor has abolished the lifetime allowance on the amount workers can save in pensions without paying tax. The chancellor says he will also increase the pensions annual tax-free allowance from £40,000 to £60,000. For higher earners, a tapered allowance may also apply.
Free childcare for working parents
To help parents get back to work, starting from April 2024, every child over nine months will receive 30 hours of free childcare per week. The government will pay the costs upfront and increase funding by 30% per year. Incentives of £600 for those that move into the childcare profession.
On top of this, there will be funding for schools to provide wraparound care so children can be dropped off and picked up from 8 am to 6 pm.
As we enter the new tax year from 6 April, being on top of any changes and will give you a better understanding of how much tax you will need to pay when it comes to your Self Assessment.
Keeping track of this through a Making Tax Digital compliant software, like FreeAgent, can help you be more aware of your incomings and outgoings.
You can find out more about Gorilla Accounting on their website, Twitter, Facebook and Instagram.
*Correct as of 16 March 2023
Disclaimer: The content of this blog is based on our understanding of the topic at the time of publication and should not be taken as professional advice. Any of the information may be subject to change. You are responsible for complying with tax law and if in doubt, should seek independent advice.
