HM Revenue & Customs (HMRC) has announced the tax rates and allowances for the 2023/24 tax year. The changes aim to support economic growth and provide relief to individuals and businesses. The new tax rates and allowances will come into effect from April 2023.
The personal allowance, which is the amount of income an individual can earn before paying income tax, will increase to £12,750 for the 2023/24 tax year. This represents a £1,250 increase from the previous year.
The basic rate of income tax will remain at 20%, while the higher rate will increase to 40%. The additional rate will remain at 45%.
The National Insurance Contributions (NICs) rates will also change. The primary threshold will increase to £166 per week, and the upper earnings limit will increase to £962 per week.
The corporation tax rate will remain at 19% for the 2023/24 tax year. However, the rate will decrease to 18% from April 2026.
The capital gains tax rates will remain the same, with the basic rate applying to gains up to £50,000 and the higher rate applying to gains above £50,000.
The inheritance tax threshold will remain at £325,000 for the 2023/24 tax year. However, the residence nil-rate band will increase to £175,000.
The annual exempt amount for capital gains tax will increase to £12,300 for the 2023/24 tax year.
The annual investment allowance will increase to £1 million for the 2023/24 tax year. This allows businesses to claim a 100% tax relief on qualifying expenditure up to the annual limit.
The research and development (R&D) tax relief will remain at 12% for the 2023/24 tax year. However, the scheme will be extended to include more small and medium-sized enterprises (SMEs).
The Enterprise Investment Scheme (EIS) and the Seed Enterprise Investment Scheme (SEIS) will also be extended to include more start-ups and small businesses.
The government has also announced plans to introduce a new tax relief for electric vehicles. The relief will be available for businesses that purchase electric vehicles for use in their operations.
The new tax rates and allowances will provide relief to individuals and businesses, supporting economic growth and job creation. The changes will come into effect from April 2023 and will be applicable for the 2023/24 tax year.
The new tax rates and allowances will provide relief to individuals and businesses, supporting economic growth and job creation.
