UK Tax Updates 2023: Key Changes Small Business Owners Need to Know
The fiscal landscape for small businesses in the UK has seen changes in 2023. In this article, we highlight the key tax updates and how they may affect your operations, so you can stay compliant and continue to strategically grow your business.
1. Corporation Tax Rate Changes
From April 2023, the corporation tax rate rises to 25% for businesses with profits over £250,000. However, there is a relief for smaller businesses. Companies with profits of £50,000 or less will still pay at the current 19% rate, and there will be a tapered rate for profits between £50,000 and £250,000.
2. National Insurance Contributions
National Insurance contributions for both employers and employees have increased by 1.25% for the social care levy and this continues in the 2023 tax year. It's crucial to factor these increased costs into your financial planning.
3. Extension of the Annual Investment Allowance
The government has extended the temporary £1 million cap for the Annual Investment Allowance until the end of 2023. This means small businesses can continue to deduct the full value of qualifying plant and machinery before tax.
4. VAT Threshold and Registration
The VAT registration threshold will remain at £85,000 for the tax year 2023/24. Businesses with a taxable turnover exceeding this limit must register for VAT.
Keeping up with tax changes can be a complex task, but it's crucial for maintaining your business's compliance and financial health. Consider using a cloud-based accounting solution like Xero to help manage your tax obligations and ensure you're up-to-date with the latest regulations.
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