The Autumn Statement: The owner managed business

There is one thing that we have all become accustomed to over the last few years and that is when there is ever a government announcement, there is a three-word slogan, and I would say that this time it should be “Hard” “Times” “Ahead”.

We are already aware of the increase in corporation tax, there will be a move from one rate to a combination of three rates, with a small company’s rate of 19%, a marginal rate and then a main rate at 25%. This will be effective from 1 April 2023.

Capital allowances for all will see the Annual Investment Allowance (AIA) remain at £1 million, although for companies the capital allowance super deduction of 130% will no longer be available from 31 March 2023, it must be remembered that this was only a temporary measure.

Business tax rates will change with the revaluation of properties from April 2023, however there will be reliefs available to ease the increases that are expected over the next three years.

There will be further pressures for all business owners with the increases to the national living wage to £10.42 from April 2023 and also to the national minimum wage, however with the expansion of apprenticeships some of these increases can be mitigated. In addition, there is also the national insurance employment allowance of up to £5,000 for each employer.

From April 2023 the dividend tax rate will increase by 1.25% to 8.75%, 33.75% and 39.35%. Such increases will influence the remuneration planning for directors/shareholders of Limited Companies. In addition, there will be a reduction in the value of dividends that will be tax free from the current level of £2,000 to £1,000 in April 2023 and £500 In April 2024.

For all individuals, they will see their income tax liabilities increasing with the freezing of personal tax bands until April 2028. In addition, there is also a reduction at which the 45p tax rate is applied from £150,000 to £125,140.

The annual capital gains allowance, which is currently at £12,300 will reduce to £6,000 from April 2023 and to £3,000 from April 2024, although the rates of capital gains tax will not increase.

The announcements will provide concern, although with forward planning both companies and individuals can understand the issues that will affect them, so contact us in the normal manner.

Disclaimer - All information in this post was correct at time of writing.