The new tax year 2023/24 begins later this week on 6 April 2023 after the new financial year commenced on 1 April 2023. 5 April 2023 is the deadline to claim certain allowances and reliefs such as claims for the marriage allowance which are still in time for the tax year 2018/19. Let’s take a look at some of the key tax changes which take effect.
Cross-border mandatory disclosure reporting
The UK’s new mandatory disclosure rules took effect from 28 March 2023 and require arrangements caught by the rules and entered into on or after this date to be reported to HMRC.
Several guidance documents are available on GOV.UK in respect of the new rules:-
VAT changes in Northern Ireland
Two VAT changes take effect in Northern Ireland only from 1 May 2023.
VAT zero rate for energy-saving materials
A Statutory Instrument has been published extending the temporary VAT zero rate for energy-saving materials that was introduced in GB on 1 April 2022 (and which applies until 31 March 2027) to Northern Ireland.
It also extends the reversal of legislation that was introduced in 2019, which narrowed the scope of the previous VAT relief for energy-saving materials, to Northern Ireland.
This is allowed under the Windsor Framework and aligns the VAT treatment of the supply of installations of energy-saving materials in Northern Ireland with GB.
VAT second-hand motor vehicle payment scheme
As previously advised, this scheme will be introduced on 1 May 2023 and will allow businesses to claim a VAT-related payment if they buy a second-hand vehicle in GB (England, Scotland and Wales) and move it to Northern Ireland for resale. If you are VAT registered in the EU, you may also be able to use the payment scheme if you buy second-hand vehicles in GB and export them to the EU for resale.
Until the new scheme is introduced, you should continue to follow the current guidance on sales of second-hand motor vehicles in Northern Ireland.
Corporation tax
The super deduction and 50 percent special rate allowances ended on 31 March 2023 but the new regime of full expensing for companies came into operation on 1 April 2023. Changes also took effect to the creative sector reliefs, the corporation tax rates and regime and the R&D tax relief regimes.
Rate and regime changes
From 1 April 2023:-
- The main rate of corporation tax is 25 percent for companies with taxable profits of more than £250,000;
- The rate remains at 19 percent if taxable profits are £50,000 or less; and
- Companies with profits between £50,000 and £250,000 pay corporation tax at the main rate reduced by a marginal relief providing a gradual increase in the effective corporation tax rate.
Note that the above limits are reduced for the number of associated companies. A company is an associated company of another company if one has control of the other, or both are under the control of the same person or persons. ‘Control’ for this purpose has the same meaning as for close companies (see CTM60210). A company may be an associated company no matter where it is resident for tax purposes. An associated company is counted even if it is an associated company for only part of an accounting period (but see CTM03955 where the accounting period straddles 2 financial years where there is a change in the upper or lower limits or fractions).
An associated company which has not carried on any trade or business (see CTM03945) at any time during the accounting period is disregarded. If that company is an associated company for only part of the accounting period and has not carried on any trade or business at any time during that part of the accounting period, it is also disregarded.
New HMRC guidance at CTM03900 onwards sets out when the small profits rate of 19 percent applies and how to undertake the calculation of marginal relief using a prescribed formula.
HMRC have also separately launched a new online marginal relief calculator to assist companies.
R&D tax relief
The rates of R&D tax relief also changed from 1 April 2023. HMRC has published detailed guidance on the changes.
For qualifying expenditure on or after 1 April 2023, the SME additional deduction decreased from 130 percent to 86 percent, and the SME payable tax credit rate decreased from 14.5 percent to 10 percent. However, the taxable R&D expenditure credit rate for claims under the large regime increased from 13 percent to 20 percent.
A new credit rate is available to R&D intensive companies who will be able to claim a payable tax credit rate of 14.5 percent for qualifying R&D expenditure, compared to the lower 10 percent available to other SMEs from 1 April 2023. These changes will take effect from 1 April 2023 with eligible companies able to claim once the Finance Bill has received Royal Assent.
However, the previously announced restriction on some overseas expenditure will now come into effect from 1 April 2024 instead of 1 April 2023.
Two new forms also need to be completed including a claim notification form and an additional information form. In order to access and submit the additional information form, agents will need to have registered for an Agent Services Account. If an agent does currently have an agent services account, find out how to register here. Organisations must use their Government Gateway account to access and submit the additional information form, as must individuals.
To note, for the claim notification form, this requirement does not stand. You will be able to access and retrieve the form via your Government Gateway account and the option to use an email address will be available.
Rates and allowances changes
Various changes to rates and allowances for personal tax took effect as a result of the 2022 Autumn Statement and the recent Spring Budget. HMRC has published a number of calculator and guidance documents on GOV.UK.
2023/24 vehicle and fuel benefit details
As set out in the Autumn Statement, the 2023/24 van benefit charge and fuel benefit charges are being increased by the consumer price index
National minimum and living wages
On 1 April 2023, the government increased the National Living Wage for workers aged 23 years and over by 9.7 percent to £10.42. Changes to the National Minimum Wage rates can be found on GOV.UK.
Official rate of interest
The official rate of interest, which applies to beneficial loans and employer-provided accommodation, increases from 2 percent to 2.24 percent from 6 April 2023. Current and past rates are available at Beneficial loan arrangements — HMRC official rates.
Deadline for payrolling benefits
If employers want to payroll benefits in the 2023/24 tax year, they must register with HMRC on or before 5 April 2023. Read more from HMRC on payrolling benefits. HMRC also has a recorded webinar Taxing employees' benefits and expenses through your payroll.
2023/24 annual tax on enveloped dwellings
The 2023/24 indexation order for the annual tax on enveloped dwellings (“ATED”) regime is available and sets out the amounts payable by reference to the taxable value of the property interest. From 2023/24 onwards the taxable value of the property interest as at 1 April 2022 must be used. Broadly, the ATED is an annual tax payable mainly by companies (and certain other bodies) that own UK residential property valued at more than £500,000.
Readers are reminded that normally an ATED return must be submitted:-
- by 30 April if a property is within the scope of ATED on 1 April (the start of the return period); or
- within 30 days of acquisition if the property comes within the scope of ATED after 1 April; or
- for a newly built property, within 90 days of the earliest of the following dates:
- the property becomes a dwelling for Council Tax purposes; or
- it’s first occupied
Returns are therefore due for the return period 1 April 2023 - 31 March 2024 by 30 April 2023. More information on the ATED regime is available on GOV.UK.