Understanding Your Taxes

As at the 5th April 2023 the government have announced the following changes regarding personal and company taxation. This blog will breakdown your taxes and help you understand.

Dividend Tax

Tax free allowance for dividends has been cut from £2,000 to £1,000 for the tax year beginning 6th April 2023, this will fall to £500 for the tax year beginning 6th April 2024.

Dividend Rates are as follows-
Basic Rate 8.75%
Higher Rate 33.75%
Additional Rate 39.35%

Capital Gains Tax

Capital Gains allowance to drop from £12,300 to £6,000 from 6th April 2023.

Basic Tax Rates

The basic rate of tax will remain the same at £12,750. The higher rate of tax will come into effect at £50,271. The additional rate of tax sees a change with the rate lowered from 150,000 to £125,140, it should be noted that at this level there is no personal allowance as £1 of the personal allowance is deducted on every £2 of income over £100,000.

Capital Allowances

Changes in Capital Allowance legislation means that after 1st April 2023 until 31st march 2026 companies that invest in qualifying Plant and Machinery can benefit from the following- 100% first year allowance on main rate expenditure and 50% allowance on special rate expenditure. The Annual Investment Allowance is now set at £1,000,000. This applies to all businesses whether incorporated or non incorporated and applies to most items of Plant and Machinery, assets for leasing and second hand assets.

An allowance is also available for electric charging points up to 31st March 2025 or Corporation Tax and to 5th April 2025 for Self Assessment / Income Tax.

Corporation Tax

Corporation Tax will increase from 19% to 25% however, businesses with a profit below £50,000 will be unaffected. Profits between £50,001 and £249,999 will be on a sliding / marginal relief scale. Profits above £250,000 will pay 25%.

Pension Contributions

Annual pension allowance has increased from £40,000 to £60,000 from 6th April 2023.

Other Allowances

A £1,000 allowance is available on property and trading income subject to meeting certain criteria.

Please feel free to contact us if you have any questions regarding your taxes.

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