Income Tax Allowance, National Insurance & Rate Bands
It is important to note that the tax rates and thresholds are complicated by the fact that the power to vary the tax rates and thresholds of Non-Savings, Non-Dividend income for Scottish taxpayers has been devolved to the Scottish Parliament since April 2017. With the exception of the tax thresholds, similar powers have been passed over to the National Assembly of Wales since April 2019 in respect of Welsh resident taxpayers. The Income Tax Personal Allowance and all other elements of the Income Tax system remain part of the Chancellor’s responsibility.
As was previously announced in the 2022 Autumn Statement, the Personal Tax Allowance currently set at £12,570, will remain at this level until 2028. The Basic Rate Tax Band, presently set at £37,700 will also stay the same until April 2028. Personal allowances will be reduced by £1 for every £2 a person’s income exceeds £100,000.
UK Tax Rates 2023/24 (except Scotland)
|£0 to £12,570||0%|
|£12,571 to £37,700||20%|
|£37,701 to £125,140||40%|
Scottish tax rates 2023/24 re non-savings, non-dividend income
|£0 to £12,570||Personal allowance||0%|
|£12,571 to £14,732||Starter rate||19%|
|£14,733 to ££25,688||Scottish basic rate||20%|
|£25,689 to £43,662||Intermediate rate||21%|
|£43,663 to £125,140||Higher rate||42%|
|Over £125,140||Top rate||47%|
The national insurance rates for 2023/24 remain unchanged from that set in the 2022 Autumn Statement.
|National insurance (NI)||2023/24|
|Class 1 NI employees – earnings between £12,570 – £50,270||12%|
|Class 1 NI employees – earnings in excess of £50,270||2%|
|Class 1 NI employers – earnings in excess of £9,100||13.8%|
|Class 1A Benefits in kind||13.8%|
|Class 1B NI PAYE settlement agreements||13.8%|
|Class 4 NI self-employed – Profits between £12,570 – £50,270||9%|
|Class 4 NI self-employed earnings in excess of £50,270||2%|
|Class 2 NI (exception limit £12,570)||£3.45 (weekly)|
|Class 3 voluntary NI*||£17.45 (weekly)|
*2022/23 Class 3 NI weekly contributions can be paid up to 31st July 2023 to cover missing state pension years back to 2006.
- As already announced , the zero rate of tax dividend threshold will fall from £2,000 to £1,000 from 6th April 2023 and then to £500 from 6th April 2024.
- There will be no change to the dividend tax rate.
|Dividend ordinary rate||8.75%||8.75%|
|Dividend upper rate||33.75%||33.75%|
|Dividend additional rate||39.35%||39.35%|
Capital Gains Tax (CGT)
- A reminder that the Capital Gains Tax Annual Exemption (AE) for individuals, Personal Representatives (PR) and Trustees is set to fall over the next two tax years.
UK CGT Annual Exemption
|Tax Year||Individuals/PR *||Trustees**|
*Note – the AE is only available to PRs for to 2 tax years following the tax year in which the Deceased died.
** Note – the AE is divided equally between the number of Trusts set up by the Settlor (the AE is presently capped at £1,200 per Trust if 5 or more, or 10 or more if for the benefit of a disabled person).
- There is no change as to how the capital gain above the annual exemption will be taxed. The CGT rate will be dependent upon a combination of the taxpayers status, total income and the type of asset disposed of.
|Status||Residential property||Other Asset|
*If the Trust asset disposed of has been used in the beneficiary’s business, the gain may attract a 10% CGT rate
Separation and Divorce
- From 6th April 2023, separating spouses or civil partners are given up to three years after the year they cease to live together in which to make no gain/no loss transfers.
- No gain/no loss treatment will also apply to assets that separating spouses or civil partners transfer between themselves as part of a formal divorce agreement.
- A spouse or civil partner who retains an interest in the former matrimonial home is to be given an option to claim private residence relief (PRR) when it is sold.
- Individuals who have transferred their interest in the former matrimonial home to their ex-spouse or civil partner and are entitled to receive a percentage of the proceeds when that home is eventually sold, is to be able to apply the same tax treatment to those proceeds when received that applied when they transferred their original interest in the home to their ex-spouse or civil partner.
- The annual pension allowance will increase from the present £40,000 to £60,000 from 6th April 2023.
- The pension lifetime allowance charge and limits will be removed from 6th April 2023.
- The money purchase annual allowance will be increased to £10,000.
- The minimum Tapered Annual Allowance will also be restricted to £10,000 for individuals who’s adjusted income for the year is £260,000 or more.
- The pension tax free lump sum percentage will remain at 25% of the pension value up to a maximum of £268,275. However those individuals who have protected rights already in place can take a higher tax free amount.
- There are some individuals who save into an occupational pension under the net pay arrangements, but whose taxable income is below the personal allowance, thereby missing out on tax relief relating to those pension contributions.
- From 6th April 2024, HMRC need to make arrangements to pay eligible individuals an amount equal to the income tax relief not already received. This must be done as soon as practicable after the end of the tax year in which the contributions were made. Dependent upon the individual’s particular circumstances this amount paid may be liable to income tax.
- A reminder that the state pension is due to increase by 10.1% from April this year.
- The 55% tax charge will instead be taxed at an individual’s marginal rate for the excess lifetime allowance lump sum, serious ill health lump sum, defined benefits lump sum and uncrystallised funds lump sum death benefit.
Inheritance Tax (IHT)
- As stated within the 2022 Autumn Statement, the 40% IHT rate, the £325,000 IHT Nil Rate Band and the £175,000 Residence Nile Rate Band (RNRB) will remain in place until April 2028.
- The commencement of the tapering off of the RNRB will also remain at £2 million.
- The maximum childcare cap for people on Universal Credit (UC) will increase to £951 for a single child and £1,630 for two children.
- Parents will also receive UC childcare payments upfront rather than in arrears.
- Funding to nurseries will increase to £204M from this September rising to £288M next year. – an average of 30% increase in the two- year-old rate.
- There will be pilot incentive payments of £600 for childminders joining the profession and £1,200 if they join through an agency.
- The ratio for the number of two year old children in England who can be looked after by each childcare member of staff is to be increased from 1:4 up to 1:5. This will be optional.
- There will be an extension of 30 hours of free childcare to one and two-year-olds in England. The plan is not being implemented immediately.
- Working parents of two-year-olds will be able to access 15 hours of free care from April 2024. From September 2024, 15 hours will be extended to all children from 9 months upwards.
- From September 2025 every single working parent of under-fives will have access to 30 hours free childcare per week.
Disability Benefit Payments
- The Work Capability Assessment used to judge eligibility for sickness benefits will be scrapped.
- Under the current system disabled people need to have the assessment and be found unable to work to receive additional support.
- Under the new Budget plans disability benefit claimants will continue receiving payments after they return to work.
- There will be a new, voluntary employment scheme for disabled people where the government will spend up to £4,000 per person to help them find appropriate jobs and put in place the support they need.
- There will be £400m in funding to increase the availability of mental health and musculoskeletal resources for workers.
Universal Credit Sanctions
- Sanctions will be applied more rigorously to those who fail to meet strict work-search requirements or choose not take up a reasonable job offer.
- For those working low hours, the Administrative Earnings Threshold will rise from the equivalent of 15 hours to 18 hours at National Living Wage.
Apprenticeships for the over 50s
- Government to offer ‘Returnee ships’ to operate alongside skills boot camps and sector based work academies targeted at the over 50’s who want to return to work.
- The number of 50+ Universal Credit claimants who receive mid-life MOTs will increase from 8,000 to 40,000 a year.
Business Rates (England)
- As already announced in the 2022 Autumn Statement:
- The business rates multiplier will be frozen for 12 months from April 2023.
- This will maintain the small business multiplier at 49.9p and the standard multiplier at 51.2p rather than uprating them to 52.9p and 54.2p respectively.
- 75% business rates discount to businesses occupying eligible retail, hospitality and leisure properties in England up to a cash cap of £110,000 per business. This discount will apply for 12 months from 1st April 2023.
- There will be a three year transitional relief measure to cap bill increases for properties at a set percentage each year as a result of increasing rateable values at the 2023 business rates revaluation. This will take effect from 1st April 2023 and run until 31st March 2026.
- In the first year, these increases will be capped at 5% for small, 15% for medium and 30% for large properties. These caps will increase in later years of the scheme.
- There will also be a three year supporting measure which will cap bill increases at £600 per year for businesses losing eligibility for or seeing reductions in Small Business Rate Relief (SBRR) or Rural Rate Relief (RRR) as a result of the 2023 business rates revaluation.
- The corporate tax rates for those companies who do not make profits from oil extraction or oil rights in the UK or UK continental shelf have been set for the Financial year 2023 (starting 1st April 2023) as follows:
Rates for corporation tax years starting 1st April 2023
|Main rate (all profits except for ring fenced profits)||19%|
|Small profits rate (Companies with profits under £50,000)||19%|
|Main rate (Companies with profits over £250,000)||25%|
|Marginal relief fraction (Companies with profits between £50,000 and £250,000)||3/200|
- As announced in the Autumn Statement, the taxable turnover threshold for determining whether a person must register for VAT will remain at £85,000 and the point at which a person can apply to deregister will also remain at £83,000 until 31st March 2026.
- For qualifying expenditure incurred on or after 1st April 2023 but before 1st April 2026, companies can claim a 100% first year allowance for main rate expenditure (known as full expensing) and 50% first year allowance for special rate expenditure.
- Most notable exclusions will be expenditure on cars and plant and machinery for leasing, except where it is under an excluded lease of background plant or machinery for a building.
- Expenditure must be incurred by a company within the charge to corporation tax and the plant or machinery must be unused and not second-hand.
- Disposals of plant or machinery for which full expensing or a 50% first-year allowance has been claimed will be subject to immediate balancing charges.
- These balancing charges will be equal to 100% of the disposal value in the case of full expensing and 50% of the disposal value in the case of the 50% first-year allowance.
- The amount of balancing charge will be reduced proportionately if an allowance is claimed in respect of only part of the expenditure.
- An anti-avoidance provision will apply to counteract arrangements which are contrived, abnormal, or lacking a genuine commercial purpose.
- The 100% Annual Investment Allowance for certain plant and machinery expenditure, which was permanently set at £1 million in the 2022 Autumn Statement will also remain in place.
- The availability of the 100% first year allowance for qualifying expenditure on plant and machinery for electric vehicle charge-points has been extended by 2 years to 31st March 2025 for Corporation Tax purposes and to 5th April 2025 for Income Tax purposes.
Research & Development (R&D) and Patent Box
- As previously announced, for accounting periods beginning on or after 1st April 2023, the relief that can be claimed by businesses through the research and development expenditure credit (RDEC) and the research and development tax relief for small and medium-sized enterprises (SME) will change.
- The new rates will be 20% for RDEC, 86% additional deduction for SME, and 10% for SME payable credit if loss making.
- However, there is potentially additional tax relief for loss making R&D intensive SME companies also from 1st April 2023.
- Those companies may be able to claim a credit worth £27 for every £100 they spend from 1st April 2023 , if they spend 40% or more of their total expenditure on R&D.
- The 10% Corporate Patent Box relief in respect of profits arising from a patent you hold or where you have an exclusive licence over it has been left untouched.
- The higher rates of relief for the Theatre Tax Relief, Orchestra Tax Relief, and Museums and Galleries Exhibition Tax Relief have been extended for a further two years. The rates will be gradually reduced down to normal rates by 1 April 2026.
Annual Tax on Enveloped Dwellings (ATED)
- The ATED charge for those property companies liable to pay for it, has been increased by 10.1% in respect of the 2023/24 ATED year.
|£500,001 to £1m||£3,800||£4,150|
|£1,000,001 to £2m||£7,700||£8,450|
|£2,000,001 to £5m||£26,050||£28,650|
|£5,000,001 to £10m||£60,900||£67,050|
|£10,000,001 to £20m||£122,250||£134,550|
High Growth Investment Zones
There will be 12 investment zones, of which there will be at least one each in Wales, Scotland and Northern Ireland.
The 8 zones already hallmarked in England are East Midlands, Greater Manchester, Liverpool, North East, South Yorkshire, Tees Valley, West Midlands and West Yorkshire. Further details regarding the remaining sites will be announced at a later date.
They will be clustered around universities or research institutions and will aid sectors such as technology, artificial intelligence and the creative sector.
These sites will benefit from tax relief such as land taxes, enhanced capital allowances for plant and machinery, enhanced structures and buildings allowance and National insurance breaks.
Plastic Packaging Tax (PPT)
- The rate of PPT will increase from 1st April 2023 from £200 per tonne to £210.82 per tonne.
- From 1st April 2023, all late payments in respect of the Plastic Packaging Tax will be subject to the same penalties.
- The Employment Allowance, which can be set off against the employer’s National Insurance liability, will remain at £5,000 from April 2023.
National Minimum Wage (NMW) and National living Wage (NLW)
- A reminder that the NMW and NLW is due to increase from the beginning of April this year.
|Age Group/Status||2022/23 rate per hour||2023/24 rate per hour|
|Worker 23 years+||£9.50||£10.42|
|Worker 21 -22||£9.18||£10.18|
|Worker 18 – 20||£6.83||£7.49|
|Worker under 18||£4.81||£5.28|
- The accommodation offset rate will increase to £9.10 an hour.
Lifelong Loan Entitlement (LLE)
- From 2025, people up to the age of 60 will be able to access loans worth the equivalent of 4 years of post-18 education (£37,000 in today’s tuition fees) and use them flexibly over the their working lives to suit their circumstances.
- The aim is, in part, to empower people to learn throughout their lives but also, in part, to enable workers to retrain and upskill to meet the needs of the cutting edge industries and high paid jobs of the future.
- Maintenance support will be expanded to be offered across all eligible technical and part-time courses the LLE will fund.
Stamp Duty Land Tax (SDLT)
- The SDLT residential rates and thresholds will remain as they are until 31st March 2025 inclusive.
- The Devolved Parliaments of Wales and Scotland set their own land transaction tax rates.
England + Northern Ireland SDLT residential rate
|Property/Lease premium/Transfer value*||SDLT rate**|
|Up to £250,000||Zero|
|£250,001 to £925,000||5%|
|£925,001 to £1,500,000||10%|
*First time buyers relief – no SDLT up to £425,000 then 5% between £425,0001 and £625,000.
If property in excess of £625,000 then no relief due..
**Non-UK resident person may have to pay an additional 2% SDLT surcharge
Wales residential Land Transaction Tax (LTT) rate
|Property (freehold/leasehold) value||LTT rate|
|Up to £225,000||Zero|
|£225,001 to £400,000||6%|
|£400.001 to £750,000||7.5%|
|£750,001 to £1,500,000||10%|
Scotland’s residential Land & Buildings Transaction Tax (LBTT)
|Property purchase value||LBTT rate|
|Up to £145,000*||Zero|
|£145,001 to £250,000||2%|
|£250,001 to £325,000||5%|
|£325,001 to £750,000||10%|
*For first time buyers the zero rate band increase to £175,000
- The SDLT surcharge on acquiring an interest, in excess of £40,000, in a second residential property remains at 3%.
Energy Price Guarantee (EPG) and Cost of Living
- The EPG scheme applies to England, Scotland and Wales. A parallel scheme recognising the different market fundamentals, has been rolled out in Northern Ireland.
- The present annual EPG cap of £2,500 for a typical household, has been extended a further 3 months to the end of June 2023.
- As already announced, a one-off payment of £900 will be paid to households on means-tested benefits (income-based Jobseeker’s Allowance; income-related Employment and Support Allowance; Income Support; Pension Credit; Universal Credit; Child Tax Credit; Working Tax Credit) across the UK in 2023-24.
- Pensioner households (those with people over State Pension age) will receive a one-off payment of £300 Pensioner in 2023-24.
- A one-off Disability Cost of Living Payment of £150 to recipients of extra-costs disability benefits across the UK in 2023-24.
- The Government will be investing £20 billion into the carbon capture market which will create up to 50,000 skilled jobs.
- Funding will go to schemes aiming to store 20-30m tonnes of CO2 yearly by 2030.
- The government will increase the duty rates under the revised duty structure for alcohol products being introduced from 1 August 2023 in line with the Retail Price Index (RPI).
- There will also be an increase to the value of Draught Relief from 5% to 9.2% for qualifying beer and cider products and from 20% to 23% for qualifying wine, other fermented products (previously made-wine) and spirits.
- There will be no increase in fuel duty for yet another year.
- There will be a second round of the city region sustainable transports settlements funding amounting £8.8 billion over the next 5 years.