With several tax changes due to come into force from April 2023, we look at a few last-chance opportunities available now to both individuals and companies, to save money in the coming months.
Last-chance Opportunities – Income Tax
Where income is expected to be between £125,140 and £150,000 in 2023/24, bringing income into 2022/23 could mean the difference between being taxed at 40% in 2022/23, rather than being taxed at 45% in 2023/24; or between 41% and 47% in Scotland. There are a variety of ways that this may be done, and we can help you review the possibilities in your circumstances.
A phased reduction in the capital gains tax (CGT) annual exemption is on the horizon.
Currently £12,300, the exemption falls to £6,000 from 6 April 2023. A further reduction takes effect from 6 April 2024, when it drops to £3,000. A key component of any such planning is to make use of the annual exemption. It is possible to transfer assets between you and your spouse on a no gain/no loss basis in order to make best use of the exemption. It is essential to get the detail of any transfer correct. Do please discuss any disposal with us first to make sure that it is effective for tax purposes.
ISAs are sometimes referred to as a tax ‘wrapper’ for investments: they allow you to make a tax-efficient investment, rather than dealing directly in the investment market and facing the associated tax consequences. The tax benefits are considerable.
ISAs are free of income tax and capital gains tax and do not impact the availability of the savings or Dividend Allowance. ISA limits cannot be carried into future years. Use it before 5 April 2023, or lose it.
ISA Subscription Limits
|Type of ISA||2022/23 Limit|
|Stocks and shares ISA||£20,000|
|Innovative finance ISA||£20,000|
s, once the capital gains tax annual exemption falls from 6 April 2023, ISAs become an even more important tool for tax planning.
HMRC’s Corporation Tax Super-Deduction Comes to an End 31/3/2023. Should my Company Take Advantage?
HMRC’s Corporation Tax super-deduction scheme finishes on 31 March 2023. The super-deduction allowed companies to cut their taxes by up to 25p for each pound invested.
Simultaneously, the rate of corporation tax will increase from 19% to 25% for many companies from 1 April 2023. To benefit from an accelerated tax saving with a capital purchase, action should be taken now to determine if action should be taken before that date.
For companies in the following situations, the consequences of purchasing an asset in March 2023 as opposed to April 2023 could be of even greater benefit to the company:
- Where profits are being made below the £250,000 limit (adjusted for associated companies)
- Where a company is in a taxable loss position
If you have any questions regarding the forthcoming changes to UK corporation tax, please get in touch with your usual contact at the Dixcart office in the UK or e-mail: firstname.lastname@example.org.