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UK Budget 2023: Big Changes for Businesses and Households

UK Budget 2023: Big Changes for Businesses and Households
  • 24 March, 2023

The UK budget for 2023 was announced by Jeremy Hunt. According to predictions by the Office for Budget Responsibility (OBR), the United Kingdom is expected to avoid a recession in 2023. The economy is predicted to experience a contraction of 0.2% this year but is projected to rebound with growth of 1.8% next year, followed by 2.5% in 2025 and 2.1% in 2026.

Chancellor Jeremy Hunt announced a planned rise of corporation tax from 19% to 25%. This increase will apply to profits over £250,000 from 1 April 2023. A small profit rate (SPR) will also be introduced for companies with profits of £50,000 or less so that they will continue to pay Corporation Tax at 19%.

A small profits rate (SPR) is a lower rate of corporation tax that applies to companies with profits below a certain threshold. In the UK budget for 2023, it was announced that from 1 April 2023, an SPR will be introduced for companies with profits of £50,000 or less so that they will continue to pay Corporation Tax at 19%.

This means that small companies with profits below the threshold will not be affected by the increase in the main rate of corporation tax from 19% to 25%.

The introduction of a small profits rate (SPR) in the UK budget for 2023 means that small businesses with profits of £50,000 or less will continue to pay Corporation Tax at 19%, rather than being subject to the increase in the main rate of corporation tax from 19% to 25%.

This means that small businesses with profits below the threshold will not see an increase in their corporation tax bill because of the changes announced in the budget. This could help to support their financial stability and growth.

Larger businesses with profits over £250,000 will be subject to the increase in the main rate of corporation tax from 19% to 25% from 1 April 2023. This means that they will see an increase in their corporation tax bill as a result of the changes announced in the budget.

Some MPs have warned that this increase could “hammer” businesses and curb growth. However, it is also expected to raise around £18 billion a year and act as a down payment on the government’s full Medium-Term Fiscal Plan.

In addition to changes to corporation tax, there were several other tax changes announced in the UK budget for 2023. on of the biggest changes was a reduction of the additional-rate income tax threshold from £150,000 to £125,140 from 6 April 2023. This means that around 250,000 taxpayers will be pushed into this higher tax band and will pay 45% tax on any income above the new limit.

If you own a small business with profits of £50,000 or less, you will continue to pay Corporation Tax at 19% due to the introduction of a small profits rate (SPR) in the UK budget for 2023. This means that your corporation tax bill will not increase as a result of the changes announced in the budget.

However, if your business has profits over £250,000, it will be subject to the increase in the main rate of corporation tax from 19% to 25% from 1 April 2023.

Car tax rates also increased. The standard rate for 12 months tax is now £180 (up from £165) while for alternative fuel cars it has risen to £170 (from £155). This applies to cars registered from April 1st 2017.

One of the measures taken to support households in the UK budget for 2023 was spending on energy bill support programmes. This is aimed at helping households with high energy bills. However, housing benefits remain frozen at levels set in 2020.

The budget has been criticized by some charities for ignoring the UK housing emergency, with housing benefits remaining frozen at levels set in 2020. On the other hand, spending on energy bill support programs has pushed the UK budget deficit to a record high for February. 

Overall, while there are some positive signs of economic recovery, there are also concerns about certain areas such as housing and energy bills that remain unaddressed.

Domenico Santomasi

Category: Blog

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