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Key points of spring budget.

Tax
Capital allowances: the government is introducing full expensing. Companies incurring qualifying expenditure on the provision of new plant and machinery on or after 1‌‌‌ April‌‌‌ ‌2023 but before‌‌‌ ‌1‌‌‌ April‌‌‌ ‌2026 will be able to claim new temporary first-year allowances. These allowances are: 100% first-year allowance for main rate expenditure – known as full expensing; and a 50% first-year allowance for special rate expenditure.

Research and development:  a new credit rate will be available to R&D intensive loss-making companies whose R&D expenditure constitutes at least 40% of total expenditure. Qualifying companies will be able to claim a payable credit rate of 14.5% for qualifying R&D expenditure. The changes will take effect from 1‌‌‌ ‌April‌‌‌ ‌‌‌‌2023 with eligible companies able to claim once the Finance Bill has received Royal Assent.

Reforms to audio visual tax relief:following a public consultation, the film, TV and video games tax reliefs will be reformed, becoming expenditure credits instead of additional deductions from‌‌‌ ‌1‌‌‌ ‌April‌‌‌ ‌2024. The new Audio-Visual Expenditure Credit will replace the current film, high-end TV, animation and children’s TV tax reliefs. Film and high-end TV will be eligible for a credit rate of 34% and animation and children’s TV will be eligible for a rate of 39%. The new Video Games Expenditure Credit will have a credit rate of 34%.The current rates for these reliefs have been extended by a further 2 years. Museums and Galleries Exhibitions relief, which was due to expire in March‌‌‌ ‌2024, has been extended until March 2026.

Pensions lifetime allowances:Spring Budget abolishes the LTA and increases the Annual Allowance from £40,000 to £60,000. These changes will take effect from April‌‌‌ ‌2023.

Indirect taxes:the cut in the rates of Fuel Duty introduced at Spring Statement in March‌‌‌ ‌2022 will be extended for a further 12 months. As previously announced, the government will legislate in Spring Finance Bill 23 for a new structure for alcohol duty, based on the principle of taxation by strength, as well as 2 new reliefs. Duty rates under the revised structure on all alcoholic products produced in, or imported into, the UK are being increased in line with the Retail Price Index (RPI). The new Draught Relief is being increased from 5% to 9.2% for qualifying beer and cider products, and from 20% to 23% for qualifying wine, spirits based and other fermented products. These changes will take effect from‌‌‌ ‌1 August‌‌‌ ‌2023.

Simplification:

Extending the Payrolling Registration Service for Benefits in Kind (PBIK) to Authorised Agents: 

this measure will allow authorised tax agents to register for the PBIK service on behalf of their clients. It will ensure that those employers, who provide benefits in kind (BiKs) to their employees, will be able to report them to HMRC in real time through their payroll via their agent. This will enable HMRC to simplify and modernise the service by moving away from a paper based retrospective reporting system to a digital one that collects tax in real time.

Cash Basis reform: the government is consulting on reforming the cash basis for the self-employed, a simplified way for over 4 million sole traders to calculate taxable profits for income tax purposes. This consultation will run from 15‌‌‌ ‌March ‌‌‌2023 to 7‌‌‌ June‌‌‌ ‌2023.

Tax administration customs:the government is publishing a discussion document exploring how HMRC can simplify and modernise Income Tax services as part of its Tax Administration Framework Review. The government has also announced a set of customs measures focused on the simplification of customs import and export processes to reduce admin burdens for traders has been unveiled.

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