The UK government’s budget for 2023 has recently been announced and it includes several updates that will affect individuals and businesses. Here is a summary of the key changes:
There will be no changes to the income tax rates or thresholds for the 2023-24 tax year. However, the government has announced that it will be reviewing the income tax system with a view to simplifying it and reducing complexity for taxpayers.
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National Insurance Contributions (NICs)
The government will be increasing the National Insurance threshold from £9,568 to £9,900. This means that individuals earning less than £9,900 per year will not have to pay any National Insurance contributions. The upper earnings limit for NICs will also increase from £50,270 to £51,000.
From April 2023, the minimum employer contribution to workplace pensions will increase from 3% to 4% of an employee’s qualifying earnings. The employee contribution will also increase from 5% to 6%. This means that the total minimum contribution will rise from 8% to 10%.
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The main rate of corporation tax will increase from 19% to 25% from April 2023. This will apply to companies with profits over £250,000. Small companies with profits under £50,000 will continue to pay the current rate of 19%, and there will be a tapered rate for companies with profits between £50,000 and £250,000.
There will be no changes to the VAT rates, but the government has announced that it will be reviewing the VAT system with a view to simplifying it and reducing complexity for businesses.
Capital gains tax
There will be no changes to the capital gains tax rates or thresholds for the 2023-24 tax year.
The government has announced a two-year extension to the business rates holiday for retail, hospitality, and leisure businesses in England. This means that these businesses will not have to pay business rates until April 2023.
The government has announced several environmental taxes, including a new Plastic Packaging Tax and a reform of the Climate Change Levy.
The Plastic Packaging Tax will apply from April 2023 to all plastic packaging produced in or imported into the UK that does not contain at least 30% recycled plastic. The tax will be set at £200 per tonne.
The Climate Change Levy will be reformed from April 2023 to include a new electricity generation tax. This will apply to companies that generate electricity using fossil fuels, with the aim of encouraging them to switch to renewable sources.
There will be no changes to the fuel duty rates for the 2023-24 tax year.
Alcohol and tobacco duties
The government has announced that there will be no changes to the alcohol and tobacco duties for the 2023-24 tax year.
Overall, the 2023 UK budget contains some significant changes that will affect individuals and businesses. The increase in National Insurance thresholds will provide some relief for low earners, but the increase in corporation tax rates will hit larger businesses hard. The extension of the business rates holiday will be welcome news for many struggling retail, hospitality, and leisure businesses, while the new environmental taxes show the government’s commitment to tackling climate change. As always, it is important for individuals and businesses to keep up to date with the latest changes in the budget and to seek professional advice if they are unsure how they will be affected.
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