Upcoming Tax Changes for April 2023
As we head towards the new tax year we have rounded up some of the changes to the tax legislation for you. We have also given a reminder of some of the rates and allowances for your ease of reference.
Personal Tax
Non Savings income Tax thresholds For England and Northern Ireland
Tax Rate Percentage Thresholds
Personal Allowance 0% £0 - £12,570 *
Basic Rate 20% £12,571 - £50,270
Higher Rate 40% £50,271 - £125,140
Additional Rate 45% £125,141 upwards
You will note that the threshold for additional rate taxpayers has been reduced for the 2023/24 tax year.
*Your personal allowance will be reduced by £1 for every £2 income received over £100,000
Saving Allowance
If you are a basic rate taxpayer the first £1,000 of savings income is tax free.
Higher rate taxpayers are entitled to £500 tax free savings income.
Additional rate taxpayers are not entitled to any savings allowance.
Dividend Rates
The dividend tax free allowance for 2023/24 will be £1,000. The rates for dividend income remain unchanged from 2022/23 and are as follows:
Tax Rate Percentage
Basic Rate 8.75%
Higher Rate 33.75%
Additional Rate 39.35%
The dividend tax free allowance for 2024/25 will be further reduced to £500 under the current legislation.
Capital Gains Tax
The Capital Gains Tax Annual Exempt Amount for individuals will be reduced to £6,000 from April 2023 and will be further reduced to £3,000 from April 2024.
The Capital Gains Tax Annual Exempt Amount will be reduced to £3,000 for most trustees from April 2023 and will be further reduced to £1,500 from April 2024.
For reporting capital gains on the sale of a residential property the reporting deadline remains at 60 days from the date of completion.
Pension Changes
From 6 April 2023 the annual allowance for pension contributions will be increased to £60,000.
The lifetime allowance for pension savings has also been abolished.
National Insurance Contributions
Class 1 NIC Thresholds Per Week Per Month Per Year
Lower Earnings Limit £123 £533 £6,396
Primary Threshold £242 £1,048 £12,570
Secondary Threshold £175 £758 £9,100
Upper Earnings Limit £967 £4,189 £50,270
Employee (Primary) contribution rates will be 12%, 5.85% and 2% depending on the National Insurance Category Letter and the employees earnings.
Employer (Secondary) contribution rates will be 13.8% or 0% depending on the National Insurance Category Letter and the employees earnings.
Class 1A National Insurance Contributions for benefits in kind will be 13.8% as will Class 1B National Insurance Contributions for PAYE Settlements.
NIC Credit Given Class 2 Class 4
£0-6,724 No £0 0%
£6,725 - £12,570 Yes £0 0%
£12,570 - £50,270 Yes £3.45 per week 9%
£50,270 upwards Yes £3.45 per week 2%
Corporation Tax
The Corporation Tax main rates for companies with profits over £250,000 will be 25%
Companies who have profits of £50,000 or less will continue to pay tax at 19%
Companies who have profits between £50,000 - £249,999 will pay tax at the main rate with a marginal relief to provide a more gradual increase in corporation tax rate.
Capital Allowances
The super deduction of 130% will end on 31 March 2023 and will be replaced by 100% first year relief on qualifying plant and machinery investments. This is allowable for limited companies only.
First year allowances of 50% will be given to purchases of special rate assets.
Annual Investment Allowance remains at £1,000,000