| Date | What’s Due |
| 01/04 | Corporation tax payment for year to 30/6/22 (unless quarterly instalments apply) |
| 05/04 | 2022/23 tax year ends on 5th April. 2023/24 tax year begins on 6th April. |
| 19/04 | PAYE & NIC deductions, and CIS return and tax, for month to 5/04/23 (due 22/04 if you pay electronically) |
| 01/05 | Corporation tax payment for year to 31/7/22 (unless quarterly instalments apply) |
| 19/05 | PAYE & NIC deductions, and CIS return and tax, for month to 5/05/23 (due 22/05 if you pay electronically) |
On 15 March 2023, Chancellor Jeremy Hunt presented his first Budget to Parliament and set out a plan to reduce inflation, grow the economy and get government debt falling all whilst avoiding a recession and tackling labour shortages.
Below we set out some of the main points.
Cost of living support
Energy Costs
The Energy Price Guarantee (EPG) brings a typical household energy bill in Great Britain down to around £2,500 per year. It has now been announced that the £2,500 EPG will be extended by 3 months to 30th June 2023, before increasing to £3,000 until the end of the EPG period on 31 March 2024. This extra 3 months at £2,500 will be worth £160 for a typical household.
In Northern Ireland, a similar scheme operates, reducing typical household energy bills to around £2,109 per year. This has also been extended at the same rate until 30th June 2023.
A new scheme for businesses, charities and the public sector has been confirmed. The Business Energy Bills Discount Scheme will run until 31 March 2024, giving non-domestic customers discounts on their gas and electricity bills.
Childcare
Additional support is being provided towards childcare costs in what the government describe as a ‘childcare revolution’. This includes 30 hours of free childcare for every child over the age of 9 months, with support being phased in until every eligible working parent of under 5s gets this support by September 2025.
For Universal Credit claimants, the government will also pay childcare costs in advance rather than arrears, when parents move into work or increase their hours. The maximum they can claim will also be boosted to £951 for one child and £1,630 for two children, an increase of around 50%.
Benefits and State Pension
As confirmed at Autumn Statement 2022, the government will also increase benefits, including the State Pension, paid to recipients in the tax year to 5 April 2024 by 10.1%.
This increase in the State Pension means that most pensioners will receive £10,600 in 2023/24, where they have 35 qualifying years. Individuals are being urged to check their contribution record on their Government Gateway account and consider making Class 3 voluntary National Insurance (NI) contributions in respect of missing qualifying years. Normally it is only possible to make voluntary NI contributions for the past 6 tax years, but until 31 July 2023, it is possible to go back as far as 6 April 2006 and pay additional contributions at the 2022/23 Class 3 rate of £15.85 per week.
In-year Class 3 contributions for 2023/24 will increase to £17.45 per week.
Income tax
Increasing liabilities
The personal allowance and basic rate band threshold are now frozen in place until 5 April 2028. As earnings increase, individuals will move into higher tax bands. This is often referred to as ‘fiscal drag’ because it will raise more tax without the government increasing income tax rates.
The personal allowance continues to be partially and then fully withdrawn for higher earners, with £1 of personal allowance lost for every £2 of adjusted net income over £100,000.
Other allowances
Savings income continues to benefit from a personal savings allowance of £1,000 for basic rate taxpayers and £500 for higher rate taxpayers. Dividend income attracts a £1,000 dividend allowance in 2023/24, down from the £2,000 allowance seen in previous years. These allowances are in addition to the personal allowance and attract a 0% rate of income tax.
Pension tax relief
There was good news in the Budget for those saving in a personal pension. The current pension lifetime allowance (LTA) charge is being abolished from 6 April 2023. The LTA has caused some high earners, particularly doctors, to retire early as tax charges apply on crystallisation of pension funds if the LTA (currently £1,073,100) is exceeded.
Individuals may be able to receive 25% of their pension savings as a tax-free lump sum when they become entitled to their pension benefits. This is currently capped at 25% of the LTA and going forwards, for most individuals, will remain capped at £268,275.
Another pension limit increased by the Chancellor in the Budget was the pension Annual Allowance (AA) which increases from £40,000 to £60,000 from 6 April 2023. The AA applies to the combined pension input by the individual and, in the case of employees, their employer. Pension contributions in excess of the AA result in a tax charge on the individual, although they may take advantage of unused AA amounts from the 3 previous tax years.
For those with high incomes, the AA is tapered. From 6 April 2023, where a taxpayer’s adjusted income exceeds £260,000 (increasing from £240,000), the AA is tapered by £1 for every £2 in excess of £260,000, down to a minimum of £10,000 (increasing from £4,000).
The Money Purchase Annual Allowance (MPAA) replaces the AA when an individual starts to flexibly access a defined contribution pension scheme. The MPAA will increase from £4,000 to £10,000 on 6 April 2023.
Note that an individual’s pension contributions can be very tax efficient depending on their level of income.
The taxation rules for pensions are complex as there have been numerous changes in recent years so please talk to us about your pension contribution strategy.
Tax Efficient Savings
There were no changes to the annual limits for Individual Savings Accounts (ISAs), Child Trust Funds or the Junior ISA. These limits remain at £20,000, £9,000 and £9,000 respectively.
Capital gains tax
In the Autumn Statement, the Chancellor announced that the £12,300 annual tax-free capital gains tax exemption (or allowance) will be reduced to just £6,000 in 2023/24 and only £3,000 in 2024/25.
This change will mean that those disposing of capital assets will pay more tax, where the new lower allowance is exceeded.
Couples who are in the process of separating, or who have commenced divorce proceedings, need to be aware of new rules taking effect from 6 April 2023 concerning the transfer of capital assets between them as a result of their separation.
If you are planning any capital disposals, please contact us to discuss the best strategy for the disposal.
Inheritance tax
In the 2023 Autumn Statement, the inheritance tax nil rate band was frozen at £325,000 until April 2028. The residence nil rate band will also remain at £175,000 and the residence nil rate band taper will continue to start at £2 million.
If you anticipate your estate giving rise to inheritance tax in the future, please contact us to discuss measures that could potentially be put in place, alongside asset distribution within your family.
VAT
The VAT registration and deregistration thresholds continue to be frozen at £85,000 and £83,000 respectively, instead of increasing each year in line with inflation. This will remain the case until March 2026.
Since 1 January 2023, a new penalty regime has been in operation for late VAT return submission and late payment of VAT. The new system is designed to target more persistent offenders, with penalties escalating quickly where defaults reoccur.
Business taxes
National Insurance Contributions (NIC) for the self-employed in 2023/24
Self-employed individuals are required to pay Class 2 and Class 4 NICs if their profits exceed £12,570. These NICs are usually collected with the individual’s income tax self-assessment payments.
For 2023/24, Class 2 NICs are calculated at £3.45 per week and Class 4 NICs are calculated at 9% on profits between £12,570 and £50,750, and at 2% on profits over £50,750.
Making Tax Digital (MTD) for Income Tax
Under MTD for Income Tax, businesses will keep digital records and send a quarterly summary of their business income and expenses to HMRC using MTD-compatible software. These requirements will not be phased in until April 2026, starting with sole traders and property landlords with gross income over £50,000. Other individuals subject to Income Tax will follow at a later stage.
Tax Relief for expenditure on plant and machinery
The Annual Investment Allowance (AIA), giving 100% tax relief to unincorporated businesses and companies investing in qualifying plant and machinery, is now permanently set at £1million.
The super-deduction, which gives enhanced 130% relief for new qualifying plant and machinery acquired by companies, will end on 31 March 2023.
As a replacement for the super-deduction, ‘full expensing’ (effectively 100% tax relief, called a ‘First Year Allowance’ (FYA)) will be available to companies incurring expenditure on new qualifying plant and machinery between 1 April 2023 and 31 March 2026. The qualifying criteria is quite broad although there are exclusions, including cars and features integral to a building (for example, heating systems). With regard to ‘integral features’, a smaller 50% FYA will be available. Subsequent disposals of assets on which one of these FYAs has been claimed will trigger a clawback of tax relief at a rate of 100% or 50% of the disposal proceeds, depending on the rate of the original relief. These new FYAs will mainly be of interest to companies that have already fully utilised their £1million AIA.
The separate 100% FYA for electric vehicle charge points remains available for unincorporated businesses and companies until Spring 2025.
Unincorporated businesses and their accounting year-ends
Unincorporated businesses that prepare annual accounts to a date other than 31 March or 5 April will soon need to adopt a new process for how the profits or losses arising in those accounts are reported to HMRC.
At present, ‘basis period’ rules apply that broadly allow annual accounts that end in a tax year to act as the basis of profits or losses arising in that tax year.
This new system starts with transitional rules in the tax year ending on 5 April 2024 (2023/24). Going forwards, actual profits or losses arising in a tax year must be reported to HMRC, but this does not necessarily require a change in accounting year-end.
Unfortunately, this will make it harder for some self-employed individuals to predict their income tax liabilities, but we will be on hand to help you.
Corporate taxes
New rates from 1 April 2023
From 1 April 2023, the rate of Corporation Tax will increase to 25% if a company’s profits exceed £250,000 a year. The current 19% rate will however continue to apply where profits are no more than £50,000 a year.
Where a company’s profits fall between £50,000 and £250,000 a year, the profits are taxed at the higher 25% rate, but a ‘marginal relief’ is given to reduce the liability, with the effective rate being closer to 19% for those with profits just over £50,000.
Companies in the same corporate group (or otherwise connected by association) must share the £50,000 and £250,000 thresholds between them, making the 25% rate more likely to apply.
Research & Development (R&D) Reliefs
From 1 April 2023 a raft of changes is coming to the R&D tax relief regime and claimant companies should consider obtaining updated advice if they’ve not already done so. The key changes are:
• The Research and Development Expenditure Credit (RDEC) available to non-SME companies will be increased from 13% to 20%.
• For SME companies, R&D tax relief rates will be reduced from 230% to 186%.
• For loss-making SME companies, the current payable credit of 14.5% will only be available for companies whose R&D expenditure constitutes at least 40% of their total expenditure. For R&D claimants that don’t meet the new 40% test, the payable credit will be reduced from 14.5% to 10% of the eligible loss.
• Qualifying R&D expenditure will be expanded to include data licences and cloud computing services.
• New claimants (those who have not made a claim in the previous 3 years) will be required to inform HMRC of their intention to make a R&D claim within 6 months of the end of the accounting period to which the claim relates.
From 1 August 2023, additional information requirements will need to be fulfilled when making a R&D claim.
Creative industries tax reliefs
The government continues to support the creative industries by reforming and enhancing film, TV and video games tax reliefs. The government will also extend the temporary higher rates of theatre, orchestra, and museums and galleries tax reliefs for 2 further years until April 2025.
Employment taxes
National Insurance Contributions (NICs)
Like the main income tax bandings, employer and employee NIC thresholds are now also frozen until 5 April 2028. This broadly means that employers’ NIC will continue to apply at 13.8% to earnings in excess of £9,100 a year (£175 per week) and employees will continue to pay 12% on earnings between £12,570 and £50,270 and 2% thereafter.
Company Cars and Other Benefits
Employees are required to pay income tax on certain non-cash benefits. For example, the provision of a company car constitutes a taxable ‘benefit in kind’. Employers also pay Class 1A NIC at 13.8% on the value of benefits.
The set percentages used to calculate company car benefits are fixed until 5 April 2025 before slight increases apply to most car types, including electronic and ultra-low emission, from 6 April 2025.
More imminently, the figures used to calculate benefits-in-kind on employer-provided vans, van fuel (for private journeys in company vans), and car fuel (for private journeys in company cars) will increase in line with the Consumer Price Index (CPI) from 6 April 2023. These will become:
• Van benefit £3,960
• Van fuel benefit £757
• Car fuel benefit multiplier £27,800
Share Options
From 6 April 2023, the Company Share Option Plan (CSOP) employee share options limit will increase from £30,000 to £60,000. Additionally, restrictions on the types of shares eligible for CSOP options will be lifted.
Simplifications will also be made to the process to grant Enterprise Management Incentive (EMI) options. From 6 April 2023, there will no longer be a requirement for the company to set out any restrictions to the shares being acquired in the option agreement and the employee will no longer have to sign a working time declaration.
National Minimum Wage
The hourly rates applicable from 1 April 2023 are:
• Over 23 £10.42
• 21 to 22 £10.18
• 18 to 20 £7.49 • Under 18 £5.28
• Apprentice £5.28
Investment zones
The Government will establish 12 ‘Investment Zones’ across the UK, including a promise to have at least one each in Scotland, Northern Ireland and Wales.
Each successful zone will have access to £80m funding over 5 years and benefit from a package of tax reliefs. These include relief from Stamp Duty Land Tax (SDLT), enhanced capital allowances for plant and machinery, enhanced structures and buildings allowances and relief from secondary Class 1 National Insurance Contributions (NICs) for qualifying employers on the earnings of eligible employees up to £25,000 per annum.
March /April 2023
| Date | What’s Due |
| 01/03 | Corporation tax payment for year to 31/05/22 (unless quarterly instalments apply) |
| 19/03 | PAYE & NIC deductions, and CIS return and tax, for month to 05/03/23 (due 22/03 if you pay electronically) |
| 01/04 | Corporation tax payment for year to 30/6/22 (unless quarterly instalments apply) |
| 05/04 | End of 2022/23 tax year – many tax planning actions need to have been done by this date. |
| 06/04 | Start of the 2023/24 tax year. |
| 19/04 | PAYE & NIC deductions, and CIS return and tax, for month to 5/04/23 (due 22/04 if you pay electronically) |
The table below sets out the HMRC advisory reimbursement rates for employees’ private mileage using their company car from 1 March 2023. Where full reimbursement is made there is no taxable fuel benefit. The rates for the previous quarter, if different, are in brackets.
| Engine Size | Petrol | Diesel | LPG |
| 1400cc or less | 13p (14p) | 10p | |
| 1600cc or less | 13p (14p) | ||
| 1401cc to 2000cc | 15p (17p) | 11p (12p) | |
| 1601 to 2000cc | 15p (17p) | ||
| Over 2000cc | 23p (26p) | 20p (22p) | 17p (18p) |
Note that for hybrid cars you must use the petrol or diesel rate and for fully electric cars the rate is now 9p per mile (8p per mile up to 28 February 2023).
You can continue to use the previous rates for up to 1 month from the date the new rates apply.
It’s not too late to undertake some end of year tax planning. If you have available funds, an obvious tax planning point would be to maximise your £20,000 ISA allowances for the 2022/23 tax year.
You might also want to consider increasing your pension savings before 5 April 2023, if you have available ‘pension annual allowance’ to obtain tax relief for any additional contributions. The pension annual allowance includes any unused elements from the last three tax years as well.
Under the current rules, the government adds to your pension contributions at the 20% basic rate. For instance, if you save £4,000 in a personal pension the government tops this up to £5,000. Then, if you are a higher rate (40%) taxpayer, there is a further £1,000 tax relief given when your tax liability is calculated,
reducing the net cost to £3,000. This can be even more effective if your income is between £100,000 and £125,140 where the effective tax rate is 60% due to the restriction of your personal allowance.
You might also want to consider making capital disposals and accelerating capital gains into 2022/23 if you haven’t yet used your £12,300 capital gains tax annual exempt amount. This annual exemption will reduce to just £6,000 for gains made in 2023/24.
There are other useful tax planning points we can discuss as well, including in relation to profit extraction from owner managed businesses and in gifting inheritances. Please do get in touch if you’d like to discuss the best strategies for your circumstances.
As well as charging interest on tax paid late, HMRC may also levy a penalty where there is an error in a tax return. These penalties may be judged as careless or deliberate and the level of penalty will also depend upon whether or not;
This matter is topical following the recent sacking of the former Chancellor of the Exchequer and Chairman of the Conservative Party Nadeem Zahawi who was adjudged to have been careless in connection with the reporting of capital gains and allegedly received a 30% penalty.
The amount of the penalty is based on the Potential Lost Revenue (PLR) and the range of penalties is set out in the table below:
| Behaviour | Disclosure by taxpayer | Penalty range |
| Careless | Unprompted | 0% to 30% |
| Careless | Prompted | 15% to 30% |
| Deliberate but not concealed | Unprompted | 20% to 70% |
| Deliberate but not concealed | Prompted | 35% to 70% |
| Deliberate and concealed | Unprompted | 30% to 100% |
| Deliberate and concealed | Prompted | 50% to 100% |
Higher maximum penalties may apply when offshore matters are involved.
Where HMRC issue the taxpayer with a “nudge” letter that would be regarded as a prompt from the department and thus potentially increases the level of penalty that might be imposed.
The law defines ‘careless’ as a failure to take reasonable care and needs to have consideration of the taxpayer’s abilities and circumstances. In HMRC’s view it is reasonable to expect a person who encounters a transaction or other event with which they are not familiar to take care to find out about the correct tax treatment or to seek appropriate advice. A taxpayer who can demonstrate that they acted on professional advice from a person with the appropriate expertise, will normally be able to demonstrate they take reasonable care.
HMRC may reduce, or mitigate, the penalty depending on the quality of the disclosure, but any such reduction will not take the penalty percentage below the bottom of the stated range. The quality of disclosure is based on three factors – ‘telling’, ‘helping’, and ‘allowing access to records’.
HMRC may also suspend a penalty if it can be demonstrated that controls can and will be put in place to prevent the matter occurring again in future.
Following on from the alleged abuse of the Research and Development (R&D) tax relief schemes, particularly the SME tax credit scheme, HMRC have issued “nudge” letters to the directors of over 2,000 claimant companies asking them to check their claims. Here is an extract from the letter:-
“As Company Director, it’s important you submit accurate claims for the correct amount of tax relief. If we check a claim and find it’s incorrect, your company might be asked to pay back the full amount.
This letter is not a compliance check into your Company Tax Return. It is to help you make sure your claims are complete and correct.
What you need to do now
Please review your previous R&D claim using the checklist below to make sure all the information you have given is complete and correct.
If you’re unsure about the answers to these questions, you should contact HMRC….
…..In some circumstances we may need to open an enquiry into your claim. This could lead to a delay in us paying you any tax relief due. It could also mean that we have to reject your claim if we find it’s incorrect. And we could charge you a penalty. The best way to avoid delay, rejection of your claim, or penalties is to check your previous and future claims online now.”
We encourage all R&D claimants to consider questions 1-7 above and to contact us if they have any queries.
| 01/02 | Corporation tax payment for year to 30/4/22 (unless quarterly instalments apply) |
| 19/02 | PAYE & NIC deductions, and CIS return and tax, for month to 5/02/23 (due 22/02 if you pay electronically) |
| 28/02 | 5% surcharge added to the outstanding balance of tax and national insurance due to be paid on 31 January 2023 |
| 01/03 | Corporation tax payment for year to 31/5/22 (unless quarterly instalments apply) |
| 19/03 | PAYE & NIC deductions, and CIS return and tax, for month to 5/03/23 (due 22/03 if you pay electronically) |
Changes to the NMW rates – From 1st April 2023 the national minimum wage (NMW) rates are increasing. There are the minimum rates most employees are entitled to. You can use the minimum wage check option to check you are paying your employees the correct rates.
Sage 50 Payroll Year end update will be released shortly
Sage 50 Payroll year end update will be released shortly.
If you would like information on any Sage product and how it can help your business or have any other queries please contact us
Tips of the Month
Accounts
Disable/Delete customer alerts
If you want to stop a customer alert from popping up in Sage 50cloud Accounts you can either disable it or delete it.
Disable a customer alert
This alert now shows No in in the Active column and no longer appears when processing. If you want to enable the alert again just go into the alert again and clear the Disable this alert check box.
Delete a customer alert
Disabling or deleting alerts is the same for Suppliers, Products and Services, just select the relevant records.
If you would like help with setting up, amending, disabling or deleting custom alerts or need any other help with your Sage Accounts please contact us
Payroll
Correcting Personal Employee information
Now is a good time to check that all the personal information you hold on Sage 50 Payroll for your employees is correct and if needed you can correct anything before the payroll year end.
Correcting Employee Details
If you submit an FPS and an employee’s personal details are incorrect, you must contact HMRC to report this.
Note: If you enter the details into Sage, but don’t report the changes to HMRC, the new details don’t update on the employee’s HMRC record. This may result in a query from HMRC.
Two useful reports you can use are:-
If you need help checking or updating your employees’ details or need any other help or advice with your payroll please contact us
We can also provide a remote access service where we can directly link into your computer to help you resolve your Sage Accounts or Payroll problems.
If you would like any help or assistance with your Sage or would like to take advantage of any Special offers running this month or about any other Sage products please contact us on:
Email: [email protected]
Or
Telephone 01691 684011/654545
| Those planning to claim the UK state pension should check their national insurance (NI) record before 5 April 2023. Currently, voluntary contributions can be made to plug gaps back to April 2006, but this will be curtailed from April.
National insurance contributions are typically made by employed and self-employed individuals based on their earnings. Individuals may also receive NI credits if they are eligible. These NI contributions or credits make up a person’s NI history, which may affect their entitlement to the state pension as well as other benefits, such as employment and support allowance. In general, to qualify for the maximum ‘new state pension’ (received by those retiring on or after 6 April 2016) a person must have 35 qualifying years of NI contributions. For part payment of the ‘new state pension’ a person must have contributed for at least 10 years. For those whose NI record started before 6 April 2016, different rules may apply; the number of required years of NI contributions/credits to obtain the full state pension may be higher. If individuals have not contributed enough prior to reaching state pension age, they may not be able to claim state pension, or receive the full state pension amount. To protect state pension and other benefits it may be beneficial for people to make voluntary NI contributions to top up their contribution history, potentially increasing the amount of state pension they will receive. Specific financial advice is recommended when making that decision as it requires predicting, to an extent, what contributions will be made before state retirement age and the risk of future changes in the rules. Normally, it is only possible to make voluntary contributions for the past six tax years. Currently there is an extension in place. Individuals can fill gaps in their NIC history from 6 April 2006 to the present date by making voluntary contributions. However, from 6 April 2023, the timeframe for making voluntary contributions will revert to the normal six years. This means that in the 2023/24 tax year, it will be possible to make contributions going back to the 2017/18 tax year only. Individuals should therefore take the opportunity to check their NI record to identify any shortfalls in their NI history. Taxpayers should also check that their record includes NI contributions paid through PAYE or self assessment, and NI credits earned. They should contact HMRC to have any errors corrected. Actions for taxpayers to take before 5 April 2023:
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