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Key Tax Changes for Small Businesses in 2023-24

Did you know that in just one fiscal year, there can be a whirlwind of tax changes that impact small businesses like a hurricane on a sleepy coastal town? Well, brace yourselves, because 2023-24 has turned out to be quite a stormy year for small business owners when it comes to taxes. If you’re feeling a little overwhelmed, you’re not alone. But fear not, we’ve got your back.

In this comprehensive guide, we’ll explore the key tax changes for small businesses in 2023-24. From the rise in corporation tax rates to the new capital allowance schemes, and from the business rates relief package to the VAT threshold freeze – we’ll walk you through these changes and explain how they may affect your business.

By staying informed and adapting to these changes, your business can stay afloat and even thrive in this ever-changing tax landscape. So, tighten your life jacket and let’s dive into the world of taxes!

Capital Allowance Schemes

Full Expensing Scheme: 100% Good News for Small Business Tax

Gone are the days of the super-deduction scheme. In its place, the government introduced the full expensing scheme. This allows businesses to claim 100% capital allowances on qualifying plant and machinery investments. This means small businesses can now reduce their taxes by up to 25p for every pound invested. Talk about a win!

50% First-Year Allowance: The Extension We All Wanted

The 50% first-year allowance for special rate assets isn’t going anywhere anytime soon. It’s been extended until 31 March 2026, which means more time to take advantage of this useful tax relief.

Annual Investment Allowance: The £1m Gift that Keeps on Giving

The AIA limit of £1m, announced in September 2022’s mini-Budget, is here to stay. All businesses can now write off their first £1m of capital expenditure against their tax bill. That’s one less thing to worry about when looking for accountants for self-employed near you.

Corporation Tax Rise: The Bitter Pill We Had to Swallow

Remember the corporation tax rate rises announced in March 2021? Well, they went ahead as planned. Starting April 2023, companies with taxable profits above £250,000 will pay a higher rate of 25%.

However, the rate remains at 19% for companies with profits below £50,000. As for those with profits between £50,000 and £250,000, they’ll pay tax at a reduced main rate. Although this new rate system adds cost and complexity to businesses, it’s essential to adapt and move forward.

Business Rates Package: The £13.6bn Relief We Deserve

The Chancellor introduced a £13.6bn package of measures to provide relief around business rates in England. Many rates have been significantly reduced from April 2023, giving small businesses some much-needed breathing room.

VAT Threshold: Frozen but Not Forgotten

The VAT registration threshold remains at £85,000 until 31 March 2026. Due to high inflation, more businesses must register for VAT, generating extra revenue for HMRC. But hey, registered businesses can reclaim input VAT, so it’s not all doom and gloom.

Energy Support: A Glimmer of Hope in Dark Times

Starting April 2023, the Energy Price Guarantee stays at £2,500 for the average household for three months. Additionally, the Energy Bills Discount Scheme will replace the Energy Bill Relief Scheme and run for 12 months. However, the Chancellor said any further energy bill support for businesses would be more targeted and lower beyond March 2023.

Childcare Support for Working Parents: A Win-Win for Everyone

Working parents of children aged nine months to five years old will get up to 30 hours of free childcare from April 2024 in stages, with full implementation by September 2025. This change is designed to encourage more parents to return to work, potentially easing business staff shortages. Moreover, starting September 2026, all primary schools will offer wraparound care.

Income Tax Changes and Freezes: Brace Yourselves, Folks

From April 2023, the additional 45% tax rate threshold in England, Wales, and Northern Ireland has been lowered from £150,000 to £125,140. Other thresholds, such as the basic rate and higher rate, remain frozen until 2026. However, the personal allowance was increased to £12,570, giving us some relief from the frozen rates.

Self-Employment Income Support Scheme: The End of an Era

The SEISS grant program came to an end in 2021, and no further extensions were announced. Self-employed individuals must now rely on their own resources or seek alternative financial support to weather any tough times ahead. Remember, there are small business tax accountants out there who can help you navigate these changes.

R&D Tax Credit: The Innovation Booster We Need

The R&D tax credit system received a revamp in 2023, with the introduction of the R&D Payroll Credit for qualifying small and medium-sized enterprises. This change allows businesses to claim a cash payment based on a percentage of their R&D staff costs. Now, innovation is more accessible and rewarding than ever.

Employers’ NIC Allowance: A Helping Hand for Small Businesses

Good news for small businesses – the Employment Allowance increased to £5,000 in April 2023. This means eligible businesses can reduce their employers’ National Insurance Contributions (NICs) bill. More money in the pocket is always a good thing!

Making Tax Digital: The Inevitable Digital Future

Making Tax Digital (MTD) is expanding its reach, with MTD for Income Tax Self-Assessment (ITSA) coming into effect for the tax year 2023-24. This means more self-employed individuals and landlords must keep digital records and submit their tax returns using MTD-compatible software. The digitalization of taxes is here, and it’s time to adapt.

The Wrap-Up: Tax Changes and What They Mean for Your Business

In summary, small business owners need to be aware of the latest tax changes, including:

  • The introduction of full expensing and the extension of the 50% first-year allowance for special rate assets.
  • The increase in corporation tax rates and the introduction of a tiered system.
  • The business rates relief measures in England and the VAT registration threshold remaining at £85,000.
  • Changes to energy support and childcare initiatives.
  • Adjustments to income tax, wages, and National Insurance contributions.

As a small business owner, it’s crucial to understand these changes and how they impact your bottom line. If you’re looking for an accountant or considering switching, don’t hesitate to reach out to us. We’re here to help with our nationwide online accounting services. Let Countplus Accounting be your partner in navigating these tax changes.

Remember, we’re all in this together, so let’s make the most of the tax landscape and keep your small business thriving!

Key Tax Changes for Small Businesses in 2023-24


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