Corporation Tax

The rate of Corporation Tax was set to increase from 19% to 25% from April 2023 for companies making more than £250,000 taxable profit.

Companies with taxable profits between £50,000 and £250,000 were also due to face a rise in Corporation Tax, with the rate increasing incrementally from 19% to 25% depending on how much profit the company was making. For those companies who made taxable profits of £50,000 or less, Corporation Tax was to remain at 19%.

The government has now cancelled the planned increase in Corporation Tax rates, which will remain at 19% for all companies.

The government will amend the technical provisions for the Super-Deduction as a consequence of the Corporation Tax rate being retained at 19% from 1 April 2023.

Annual Investment Allowance

The Annual Investment Allowance threshold has been permanently set at £1 million. The £1 million threshold was due to expire after 31 March 2023 and was to revert to £200,000.

The allowance provides 100% capital allowance relief for qualifying expenditure on plant and machinery up to a specified annual limit and covers the investment needs of the vast majority of the UK’s businesses.

Investment Zones

The government is in discussions with 38 local authorities in England to establish Investment Zones, and intend to introduce similar opportunities in Scotland, Wales and Northern Ireland.  Investment Zones are intended to drive growth and unlock housing across the UK by lowering taxes and encouraging business development and investment.

Areas hosting Investment Zones will benefit from:

Lower taxes – businesses will receive time limited tax benefits, including:

  • 100% business rates relief on newly occupied and expanded premises.
  • full SDLT relief on land bought for commercial or residential development.
  • Zero rate for Employer National Insurance contributions on new employee earnings up to £50,270 per year.
  • 100% first year enhanced capital allowance relief for plant and machinery used within designated sites.
  • 20% accelerated Enhanced Structures and Buildings Allowance.

Accelerated development – designated development sites will release more land for housing and commercial development, with the need for planning applications minimised.

Local authorities currently in discussions with the government include Essex County Council, Norfolk County Council and Suffolk County Council, so this is a very interesting development for our region.

Enterprise Incentivisation

The government is supporting companies to raise money and attract talent by increasing the generosity and availability of the Seed Enterprise Investment Scheme (SEIS) and Company Share Option Plan (CSOP).

Seed Enterprise Investment Scheme (SEIS)

From April 2023, companies will be able to raise up to £250,000 of SEIS investment, a two-thirds increase from the current limit of £150,000. To enable more companies to use SEIS, the gross asset limit will be increased to £350,000 and the timeframe for qualifying has increased from 2 to 3 years from the date of incorporation, or the date trade commenced if later.

The individual investor limit will be doubled to £200,000 per annum.

Company Share Option Plan (CSOP)

From April 2023, qualifying companies will be able to issue up to £60,000 of CSOP options to employees, double the current £30,000 limit. The restriction on share classes within CSOP will also be eased, better aligning the scheme rules with the rules in the Enterprise Management Incentive scheme and widening access to CSOP for growth companies.

The government remains supportive of the Enterprise Investment Scheme (EIS) and Venture Capital Trusts (VCT) and sees the value of extending them in the future.