On 15 March 2023, Jeremy Hunt, Chancellor of the Exchequer, delivered the Spring Budget 2023 setting out his plans to decrease the inflation, grow the economy and ensure debt failing.
Below is a summary of the key announcements for the private client world.
Pension Tax Relief
- The amount an individual can contribute tax free to their pension will increase from £40,000 to £60,000 per annum from April 2023.
- The Government has suggested that they are going to be looking to abolish the Lifetime Allowance that one can put in their pension in future Budgets. Currently the Lifetime Allowance is £1,073.100
- Confirmation that the main corporation tax rate will increase from 19% to 25% from 1 April 2023.
Simplifications for Trust and Estates
- Trusts and estates with income up to £500 will not pay tax on this income as it arises.
- The basic rate and the dividend ordinary rate will be removed from the first £1000 of discretionary trust income.
- Beneficiaries of UK estates will not need to pay tax on income distributed to them if the estate income was less than £500.
- The permanent changes will take effect from the 2024–2025 tax year.
- The Government intends to make inheritance tax changes to reduce reporting obligations for trusts.
Capital Gains Tax (CGT)
- The Government has addressed tax avoidance whereby shares and securities in a non-UK company are acquired in exchange for securities in a UK company, that non-UK company will not be deemed to be located in the UK for tax purposes. This measure will apply to share exchanges carried out on or after 17 November 2022.
- The Government will change the rules that apply to transfers of assets between spouses and civil partners who are separating. The legislation will give more time to couples separating to transfer assets between themselves without incurring a possible charge to CGT.
Restriction of Charitable Relief to only UK Charities
- EU and EEA charities and Community Amateur Sports Clubs will not qualify for charitable relief from 15 March 2023. There will be a transitional period until April 2024 for EU and EEA charities that HMRC has previously accepted as qualifying for relief. UK charity tax reliefs and exemptions will be restricted to UK charities and Community Amateur Sports Clubs (CASCs).
- The taxes that are affected are income tax, CGT, corporation tax, IHT, stamp duty, SDLT, stamp duty reserve tax, ATED and diverted profits tax.
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