The latest OBR projections, now suggests that the UK economy will not experience a 'technical recession' in the current year, so we will now explore how this Spring statement impacts UK SMEs.
Corporation Tax
Changes from the 19% rate to 25% marginal rate are continuing as planned. Details on the change will be outlined in the next upcoming article.
Capital Allowances
With the current temporary “130% super-deduction” expiring on 31 March 2023, a series of measures have been introduced regarding capital allowances to continue to encourage investment.
For qualifying expenditure on "plant and machinery" incurred on or after 1 April 2023 but before 1 April 2026, companies can claim against taxable profits:
- a 100% first-year allowance for main rate expenditure – known as full expensing; and
- a 50% first-year allowance for special rate expenditure.
Any disposal of assets for which claims have been made against, a balancing charge based on the rate of allowance originally claimed and disposal value will be applied.
Annual Investment Allowance (AIA) increase
The limit of the annual investment allowance (AIA) will now be permanently increased from £200,000 to £1,000,000 for qualifying expenditure on plant and machinery incurred from 1 April 2023 for corporation tax payers.
Electric Vehicles FYA Allowance extension
The 100% first-year allowance has been extended for qualifying expenditure on electric vehicle charge-point equipment until 31 March 2025 for corporation tax purposes, and 5 April 2025 for income tax purposes.
Investment zones
There will be at least 11 investment zone schemes introduced allowing businesses that reside and operate in the areas to benefit from light touch regulation and enhanced tax reliefs. Each zone will get £80 million in funding for skills investment, infrastructure, tax reliefs and business rate reductions. The zones listed as part of the scheme are:
- Liverpool
- Greater Manchester
- North East
- Teeside
- East Midlands
- West Midlands
- South Yorkshire
- West Yorkshire
- and at least 1 zone in each of Northern Ireland, Scotland and Wales
R&D Credits
From 1st April 2023, repayable R&D credit fall from 33.4% to 27% for eligible loss making tech based businesses that have 40% or more of their costs attributable to research and development (R&D) expenditure. Non R&D-intensive lossmaking companies will receive 18.60% from April 1.
Alcohol Duty
The rate of duty on draught beer in pubs will be 11p lower than alcohol sold in supermarkets from 1 August 2023.
Fuel Duty
The 5p a litre cut in petrol and diesel fuel duty will remain in place for another year from 1st April 2023.
Child Care
Free childcare for 30 hours a week has been expanded to parents of children aged between nine months and two years' old. The scheme will be phased in by September 2025 so every eligible working parent of under five years old will have access to the support.
Nurseries providers will have their hourly rate increased from September 2023.
Energy Costs
Although the economy continues to present obstacles and a difficult environment for business operations, the planned price cap increase for energy bills is still scheduled for implementation in April. Businesses however will still be provided with a reduction on the wholesale costs of gas and electricity, rather than the fixed rates set on energy contracts signed after 1st December 2021 and for those out of contract. The Energy Bills Discount Scheme has been designed to commence from the 1st April 2023 to run until March 31st, 2024 .
Threshold prices and maximum discounts for the baseline scheme have been set at:
- electricity - £19.61 per megawatt hour (MWh) with a price threshold of £302 per MWh.
- gas - £6.97 per megawatt hour (MWh) a price threshold of £107 per MWh
We create this content for general information purposes and it should not be taken as advice. Always take professional advice.
