“Cutting and simplifying” – this is how the Government headlined its 2023 Spring Budget.
So, we did some cutting and simplifying of our own, boiling the budget down into its business essentials to highlight the changes and opportunities you need to be aware of - and how we at the Chamber help our members take action to get on top of them.
2023 budget: what’s changed?
Corporation Tax – an increase for some...
The thing that has perhaps received most attention has been the increase in Corporation Tax, but this is more nuanced than it might at first seem.
For businesses with profits of £50,000 or less, for example, there is actually no change to the tax – it remains at 19%.
Likewise, businesses with profits between £50,000 and £250,000 will pay a marginal rate of tax between 19% and 25%.
Profits of £250,000 and over, however, will put you in the 25% tax band – meaning your business would pay, on £250,000 profit, an extra £15,000 per year in tax.
At the Chamber, we can connect you, as a member, to a range of experts who can help you model and mitigate these impacts.
Plant and machinery – allowances less generous
The 130% super-deduction regime for plant and machinery costs will end on 31 March 2023.
It will be replaced, for at least three years, with a (less favourable) 100% capital allowances scheme for qualifying plant and machinery – known as “full expensing”.
This will enable you to write off the entire cost of (qualifying) plant and machinery in one go, which, in turn, means that for every pound you invest in these assets, your taxes are cut by up to 25p.
For certain types of machinery – known as “special rate”, including long life assets - the Government will introduce 50% first year allowances, enabling you to deduct half the value of the investment from your profits before tax.
It’s a significant set of changes for these kinds of businesses - so are you prepared? If you’re not, Chamber membership connects you to people, resources, and learning to help you.
R&D – good news, a climbdown, and ongoing confusion
If you’re a research and development (R&D)-intensive small or medium enterprise (SME), the news is good. SME companies whose qualifying R&D spend constitutes at least 40% of total expenditure will be able to obtain a credit of 27p for every £1 of qualifying R&D expenditure (this includes two new categories: data licences and cloud computing services).
In the meantime, the previously announced restriction on the inclusion of some overseas expenditure in R&D tax relief will be deferred for a year, whilst the Government struggles to reconcile the R&D allowances for larger businesses and those for SMEs into one model.
Investment Zones - Bedfordshire misses out
The Government has announced 12 Investment Zones across the UK, with the stated aim of helping drive economic growth and “levelling up” the country. These have been well received as a significant improvement on the previous scheme of the same name, but unfortunately the Bedfordshire area doesn’t get a look-in.
This is very much the kind of issue our relationship with the British Chambers of Commerce enables us to escalate to the top table of Government
Creative industries – high-end relief only
Creative industries got a welcome mention in the budget, but the reality is that the positive changes to allowances in this sector really only touch the high-end creative businesses.
So, from 1 April 2024, new Audio-Visual Expenditure Credits will be allowed for film and high-end TV (34% of expenditure), and for animation and children’s TV (39% of expenditure). The new Video Games Expenditure Credit will also be set at 34%.
If you’re a small creative business, you’ll need to be looking for funding from other sources – and this is something the Chamber has an exceptional track record of enabling its members to access.
For more information on how membership of Bedfordshire Chamber of Commerce puts you in a stronger position to manage and get the most out of Budget and regulatory change, visit www.chamber-business.com, or call 01582 522448.