Income Tax Thresholds
All personal thresholds relating to income tax, national insurance and inheritance tax are frozen until April 2028, with the exception of the additional rate threshold which decreases from £150,000 to £125,140 from April 2023. Higher earners will therefore pay more tax from April 2023 and other taxpayers will pay more over time as inflation erodes the value of the personal allowance and lower tax bandings.
Shareholders can currently receive £2,000 of dividends tax-free. This will reduce to £1,000 from April 2023 and to £500 from April 2024. This will hit investors and company owners and could bring taxpayers with relatively few investments into self-assessment.
Capital Gains Allowance
The annual tax-free Capital Gains Tax Allowance of £12,300 will reduce to £6,000 from next April and then to £3,000 from April 2024.
The registration threshold will remain at £85,000 until April 2026.
Research & Development Tax Credits
The enhancement rate for qualifying R&D expenditure will reduce from 130% to 86%, and the tax credit will decrease from 14.5% to 10% for SMEs.
National Living Wage
NLW rates will increase from April 2023 as follows:
|Age Band||£ per hour|
|23 and over||10.42|
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