2022 was a tumultuous year in British politics, and as a result, for the economy. From fiscal announcements to mini-Budgets and autumn statements, the only thing 2022 lacked was a genuine Budget.

That came in March 2023 and as a business owner, the significant moments were likely a mixture of what was said, and what was left unsaid.

Alongside strategies for “long-term, sustainable, healthy growth”, the Corporation Tax rise went ahead. As did drops to the thresholds for Dividend Tax and Capital Gains Tax (CGT).

To offset some of these changes, the chancellor announced new plans to encourage business investment.

So what are the key factors you and your business need to consider this tax year?

Keep reading to find out.

1. Have we factored in the Corporation Tax rise?

Controversial even within the Conservative Party, then-chancellor Rishi Sunak first announced the rise in Corporation Tax in 2021. 

The proposed increase was scrapped during the Truss and Kwarteng administration but then fell foul – along with several announcements from their ill-fated mini-Budget – to a U-turn under Jeremy Hunt.

As a business owner in 2023/24, you’ll need to be aware of the rise from 19% to 25% for those businesses with profits exceeding £250,000. 

While the 19% tax remains for those businesses with profits below £50,000, a marginal rate will apply on profits between £50,000 and £250,000.

The new top rate of 25% is expected to affect 10% of companies, so you’ll need to think carefully about the knock-on effect of this tax rise if it applies to your business.

2. Can we offset the Corporation Tax rise by taking advantage of investment incentives?

The annual investment allowance (AIA) was temporarily increased from £200,000 to £1 million on 1 January 2019. This increase was extended in 2020 and again in 2021.

Jeremy Hunt used his 2023 spring Budget to further extend the £1,000,000 allowance on all qualifying IT equipment, plant and machinery investment. The chancellor also announced his wish to make the change permanent “as soon as we can responsibly do so”. 

It is hoped that the move will encourage growth and stability in your business, as it amounts to an effective (and collective) cut to Corporation Tax of £9 billion a year. 

You might also be keeping your eye on the search for up to 12 successful investment zones that are set to receive £80 million of funding each over five years. The eight shortlisted zones include the East Midlands, Greater Manchester, and South Yorkshire, with four situated across Scotland, Wales, and Northern Ireland.

3. What about the changes from Jeremy Hunt’s autumn statement?

Several changes from Jeremy Hunt’s autumn statement weren’t mentioned in his spring Budget but came into force on 6 April.

As you look to manage your business and personal finances this year, it’s worth taking note of the following changes:

Capital Gains Tax

The Capital Gains Tax (CGT) annual exempt amount fell from £12,300 to £6,000 on 6 April 2023. It is due to fall again, to just £3,000, at the start of the 2024/25 tax year. 

This huge decrease limits the profits you can make on non-ISA investments – like company shares or a second home – before a CGT liability arises. 

Dividend Tax

If you pay yourself a salary or receive other income through dividends, you’ll likely already be aware of recent changes to the Dividend Allowance.

This is the amount you can earn from dividends in a tax year before Dividend Tax becomes due. The allowance dropped from £2,000 to £1,000 in April 2023 and will drop again on 6 April 2024, to just £500.

The move (when combined with the CGT change) is set to raise more than £1 billion a year for the government from April 2025 so you’ll need to factor these changes into your plans now.

Get in touch

Our Chartered Financial Planners have the expertise to help you stay ahead of changing tax rules and legislation, allowing you to run a successful business while ensuring your personal financial plans remain on track too. 

If you have any questions about recent changes to business investment rules or tax thresholds, or you have any questions about your own long-term financial or retirement plans, please get in touch and speak to us today.

Please note

This article is for information only. Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.