CAPITAL ALLOWANCES REFORMED IN ‘BUDGET FOR GROWTH’

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A £27 billion transformation of capital allowances from April was announced by Chancellor Jeremy Hunt as he delivered a ‘Budget for growth‘.

The Spring Budget followed an improved forecast from the Office for Budget Responsibility (OBR). The OBR said it expects the UK to avoid a technical recession this year, with a stronger-than-expected performance from the economy as inflation continues to fall.

The Chancellor announced that a £27 billion transformation of capital allowances from April this year will include ‘full expensing’ of investment on IT and plant and machinery for three years, plus an extension to the 50% first-year allowance in the same period.

There was also a £500 million package for research and development (R&D)-intensive businesses. In addition, Mr Hunt announced 12 investment zones across the UK, with funding for skills and support.

Reforms to childcare, which will see free care expanded for children over the age of nine months, were key to Mr Hunt’s plans to remove the barriers to work. A range of other measures were also announced to encourage parents, the disabled and the over-50s back into the workplace.

The Chancellor also made changes to the pension system to provide incentives for doctors and other highly-skilled workers to remain in the labour market.

As high energy costs continue to affect the UK, the Chancellor extended the Energy Support Guarantee (ESG) at £2,500 for another three months, while fuel duty was frozen once more.

Mr Hunt said:

‘Our plan is working – inflation falling, debt down and a growing economy.

‘Britain is on a lasting path to growth with a revolution in childcare support, the biggest ever employment package and the best investment incentives in Europe.’

Internet link: GOV.UK

National Living Wage & National Minimum Wage increases from 1 April 2023

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The government have confirmed the increases to the national minimum wage and national living wage that will come into effect from 1 April 2023, the increases were as follows:

 

Category Current rate (2022/2023 tax year) New rate for 1 April 2023 (2023/2024 tax year) Percentage increase to minimum wage
National Living wage (23+) £9.50 £10.42 9.68%
Age 21-22 £9.18 £10.18 10.89%
Age 18-20 £6.83 £7.49 9.66%
Under 18 £4.81 £5.28 9.77%
Apprentice rate £4.81 £5.28 9.77%

 

This will mean that an employee who is 23 or older who is working 37.5 hours a week will earn £20,319 a year from 1 April 2023, an increase of £1,794 a year compared to the current rate.

Please do not hesitate to contact us at Gareth Hughes & Co on 01492 593345 if you have queries with regards to this or any other payroll matter.

HMRC SOUNDS WARNING ON NEW VAT PENALTIES

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HMRC is reminding VAT-registered businesses to file their VAT returns and pay on time ahead of new penalties being applied.

The tax authority says that the new penalties will be ‘fairer and more proportionate’ for businesses who submit their VAT returns or pay their VAT late.

The first monthly returns and payments affected by the penalties are due by 7 March 2023.

The late payment penalties and points-based late submission penalties were introduced from 1 January 2023, replacing the VAT default surcharge, and apply to accounting periods which start after that date.

The penalties for late VAT returns also apply to businesses that submit nil returns and repayment returns. Additionally, changes have been made to how interest is calculated.
Paul Riley, Director of Tax Administration at HMRC, said:

‘Our aim is to help customers get things right before monetary penalties are applied; a points-based system for late VAT returns will not punish the occasional error.

‘We are contacting 2.5 million VAT-registered businesses about the changes and will continue to support customers to help them manage their tax affairs and payments.’

Internet link: GOV.UK