The Chancellor, Jeremy Hunt, presented his 2023 Budget yesterday to the House of Commons and these are the main summary taxation points from the Budget.
There is a cap on the amount employees can accumulate into their pension savings pot over their lifetime before having to pay extra tax which is currently £1.07 million and this is to be abolished completely from 6 April 2026. The charge to tax will be removed from the 6 April 2023 before the allowance is fully abolished from 6 April 2024.
The current allowance applies to private pensions (Defined Benefit and Defined Contribution), the State Pension is not affected. The Annual Pension Allowance which is the maximum amount of money an individual can pay into their pension each year without penalty will increase from £40,000 per annum to £60,000 per year and this comes into effect from 6 April 2023. Again, this only applies to private pensions. If someone makes pension contributions over this allowance on an annual basis then additional tax charges may apply. The main rate of Corporation Tax paid by businesses on taxable profits over £250,000 is confirmed to increase from 19% to 25% with effect from 1 April 2023 although businesses with profits of less than £50,000 will continue to pay Corporation Tax at 19%. For companies that make profits between £50,000 to £250,000 the tax rate will gradually increase as their profits rise.
Companies over the next three years are also going to be allowed to charge against their income when they purchase things like such items such as IT equipment and machinery and this will reduce their profits and hence the amount of corporation tax they pay for the next three financial years commencing from the 1 April 2023 and in summary with regards to Income Tax the personal allowance which one earns during a financial year of £12,570 is frozen until 5 April 2028 together with the basic rate tax band upon which one pays 20% tax of £12,571 to £50,270.
The higher rate Income Tax which is now at 40% is now levied on earnings between £50,271 to £125,140 and over £125,140 tax will be levied at 45%.
Please do get in touch if you have any queries in connection with any of the foregoing or if you would like help with any tax planning between now and the end of the current financial year to 5 April 2023. Please contact us on 0345 646 0406 or fill in our online enquiry form and a member of our Team will be in touch.