Spring Budget 2023 Headlines for Businesses
The Chancellor’s Spring Budget on 15 March unveiled a raft of measures against the backdrop of a challenging business climate and the ongoing cost of living crisis. Yet despite fears of a recession, Jeremy Hunt told MPs that we are not “technically” in recession – with the Office for Budget Responsibility forecasting no recession in 2023 and a contraction of only 0.2%.
The government hailed a Budget “for growth” to include a £27 billion tax cut for businesses – together with a new investment zone scheme in eight locations near universities in England (and at least one in each of the other three nations). Under the scheme, each zone will benefit from £80m in funding over five years which can be used for business skill support, infrastructure, tax reliefs and business rates retention.
We look at other headline measures in the budget that businesses need to know.
Migration
· Five construction occupations will be added to the Shortage Occupation List, relaxing the immigration rules for a wide range of roles that UK businesses have been struggling to fill. The list will include bricklayers and masons; roofers, roof tilers and slaters; carpenters and joiners; construction and building trades not elsewhere classified; and plasterers.
· From this Autumn, the corporate visitor rules will also be simplified to make it easier for foreign visitors to undertake business activity without having to get work permission.
Capital Allowances
· Under a ‘full expensing’ policy with effect from 1 April 2023 until 31 March 2026, businesses will be able to deduct 100% of the cost of certain plant and machinery from profits before tax – rather than at a slower pace rate over asset’s lifespan. This relief applies to spending on main rate equipment.
· In addition, businesses can deduct the 50% first-year allowance for special rate assets from profits during the year of purchase. This was due to end on 31 March 2023 but the government has extended it for three years to 31 March 2026. For each year after the first year, 6% of the remaining cost will be written off via Writing Down Allowances (WDAs).
R&D
· Tech firms and life sciences will welcome a new research and development (R&D) scheme coming into effect on 1 April 2023. R&D intensive businesses will be eligible if operating at a loss. A company is considered R&D intensive if its qualifying R&D expenditure makes up 40% or more of its total expenditure. Eligible companies will be entitled to a tax credit of £27 for every £100 of R&D investment. (Non R&D intensive loss makers can claim £18.60).
· Also, the payable tax credit rate for R&D intensive SMEs will now stay at 14.5% for expenditure incurred on or after 1 April 2023.
Corporation Tax
· It was confirmed that the rate of corporation tax will rise to 25% from 1 April this year
Tax Simplification
· Several administrative changes have been announced with the aim of simplifying the tax system for SMEs. These include removing the need to sign a working time declaration; simplifying the customs import and export processes; and upgrading technology to enable accountants (and other agents) to payroll benefits in kind on clients’ behalf
If you would like us to cover an issue in the next NGM Tax Law Newsletter, we would be pleased to hear from you