The budget laid out by Chancellor Sunak offers small businesses the chance to reduce their energy bills and receive financial support.
Regarding business tax, here is the allocation for the Spring Budget on business tax:
Making Tax Digital (MTD):
April 2022 will see the final phase of the introduction of MTD for the VAT regime. All VAT businesses registered, regardless of their turnover, will enter MTD for VAT from their first VAT return period – this starts on the 1st of April. Your business must also keep VAT digital records and provide HMRC with your VAT return information. This can be done with MRD software, which is easily accessible on the Gov website.
MTD for Corporation Tax (CT):
The British government is committed to supporting stakeholders with any ongoing service design. Any decision will provide enough notice before implementation. This will not be mandated before 2026.
Corporation Tax Rates:
The rate for CT is 19% for the financial year, which begins on the 1st of April. From April 2023, this rate will increase by 6% (25%). The government will introduce a small profit rate for companies with no associated businesses in the accounting period – this will only apply to those companies who qualify for the small profit rate. Companies with profits between £50,000 and £250,000 will have to pay at the introductory rate reduced by a marginal relief, which will increase the CT rate gradually.
Plant and machinery → An extension to the temporary increase in Annual Investment Allowance that will last until the 31st March 2023 will allow 100% tax relief to businesses investing up to £1m in qualifying expenditure. After the 1st of April 2023, the annual investment allowance will revert to £200,000 for expenditure.
First-Year Allowances for companies → For qualifying expenditure which is unused is incurred on or after 1 April 2021 but before 1 April 2023. Companies will be able to claim in the period of investment:
- A super deduction of 130% is available where the expenditure would generally qualify for the 18% primary rate of writing down allowance
- A Special Rate Allowance of 50% for expenditure would typically attract the 6% special rate of writing down allowance.
Preventing Abuse of the E&D Tax Relief:
Starting in April 2023, claims for relief must be made digitally and require more detail. The named senior officer must endorse the claims. Companies must inform the HMRC in advance if they plan to make a claim. These claims must include details of agents who advised the company to make a claim.
From March 2024, a temporary increase in cultural tax reliefs for theatres, museums, galleries and orchestras will occur. The increase will only last until March 2024. This will increase the relief organisations can claim as they invest in new productions and exhibitions.
Also, from April 1st 2022, changes will be introduced to target the cultural reliefs better to ensure they continue to be safeguarded from abuse.
Residential Property Developer Tax
Beginning on the 1st of April 2022, the Residential Property Developer will be introduced to more prominent property developers for accounting periods.
The Residential Property Development tax is a charge of 4%, which is treated as corporation tax on the profits of TRPD over an allowance of £25m in 12 months.
Don’t hesitate to contact us for more information on the Spring Budget 2022 and business tax.