From April 23 the rate of corporation tax was set to rise to 25% for business with taxable profits above £250,000, and only those businesses with profits under £50,000 remaining at 19%. As had been highly predicted the rate increase has been reversed with the 19% rate set to stay in place for all profit levels.
This will be a welcome relief for businesses with rising costs and ensures the UK still has one of the lowest corporation tax rates in the G7.
In addition the diverted profit rate was also sent to increase to from 25% to 31% from April 2023 and will now also remain at 25%.
Currently the Annual Investment Allowance (‘AIA’) is set at £1 million but was due to drop back to £200,000 after the 31 March 2023. The £1 million limit has now been made permanent. However, whether this will stimulate growth when we have the current ‘super-deduction’ in place which gives an extra 30% deduction on top of the 100% for qualifying new plant remains to be seen, although this ends 31 March 2023.
Company Share Option Plan (CSOP)
In order to tackle employment issues businesses are facing, changes have been made to expand the conditions for the CSOP to allow more benefit to key employees and align the scheme with the Enterprise Management Incentive Scheme. From April 2023 qualifying companies will be able to issue up to £60,000 share options to employees from the current £30,000 level.
Off Payroll Working
New rules which place the onus on businesses to assess the employment status of suppliers which started in 2017 for public companies and 2021 for private companies is being repealed. This will move back any potential liability to the supplier rather than the customer and removes the onerous of potential tax liabilities on business.
Research and Development Relief
Whilst no specific announcement the review into the operation of this relief will continue.
Investment zones will be created which aim to drive growth and unlock housing. The means of providing this will be through tax incentives and planning rule changes. Main areas are 100% relief on business rates, enhanced capital allowances and structural building allowances, 0% national insurance for up 60% of employees time up to £50,270 and full stamp duty land relief.