Navigating the New Tax Year: Key Updates for Your Business

As we step into the new tax year, businesses face a landscape of significant changes. From corporation tax rates to capital gains tax adjustments, here’s what you need to know to stay ahead.

Corporation Tax Rates

Since April 2023, most companies are paying higher corporation tax rates, a change that was legislated two years in advance. The new rates are:

0 to £50,000 Profit: 19%
£50,001 to £250,000 Profit: 26.5%
Over £250,000 Profit: 25%

Smaller businesses can still benefit from the Annual Investment Allowance (AIA), which allows for full tax write-offs on up to £1 million of plant and machinery expenditures annually.

Income Tax and National Insurance

Most income tax and National Insurance allowances and thresholds are frozen until 2028, pulling more people into higher tax brackets as salaries increase. This “fiscal drag” effect is particularly pronounced in an era of high inflation.

Capital Gains Tax (CGT)

The annual exempt amount for CGT has been halved to £6,000 for 2023/24, increasing the tax burden on asset disposals. Property owners, particularly those with buy-to-let properties or second homes, need to be vigilant about compliance, especially with the 60-day reporting deadline for disposals.

Payroll and Benefits Compliance

With the cost of living crisis affecting many, borrowing money from your company might seem like a viable option. However, this comes with numerous tax implications. It’s essential to manage payroll hygiene carefully to avoid discrepancies that can lead to unexpected tax demands from HMRC.

Capital Allowances

Changes to capital allowances this year impact larger businesses the most. However, smaller businesses can still take advantage of full tax relief on up to £1 million of qualifying plant and machinery expenditures.

Electric Vehicles

Buying electric vehicles remains tax-efficient, with 100% tax relief available on new purchases. This, combined with relatively low benefit-in-kind charges for employees using electric vehicles, makes this a compelling option for many businesses.

Tax Planning

Tax planning has become more complicated in recent years, and this trend is likely to continue. Whether it’s about business decisions or personal financial moves, early tax considerations can save significant money in the long run.