Spring Budget boost prompts tax planning rethink ahead of new tax year, says Clemence Hoar Cummings

Romford-based accountants Clemence Hoar Cummings says the Chancellor’s drive for growth in the Spring Budget has created interesting tax planning opportunities for businesses and their owners.

Jeremy Hunt stepped up to the Despatch Box to provide measures that he said would deliver growth to the UK through targeted investment and support for businesses and their workers.

Prior to his announcement, many businesses were concerned about the upcoming increase to Corporation Tax in April, which will see the rate of tax rise from 19 per cent to 25 per cent for businesses with profits of £250,000 or more.

Only those with profits of £50,000 or less would continue to pay this tax at 19 per cent, with those between these two thresholds paying tax at a tapered rate.

Clemence Hoar Cummings said that the Chancellor’s introduction of ‘full expensing’ would help many companies grappling with this tax increase.

David Bransbury, Director at Clemence Hoar Cummings, said: “For the next three years businesses will be able to write off the full cost of qualifying plant and machinery expenditure in the same year they make the investment.

“This new relief sits alongside a number of existing Capital Allowances to help firms better manage their annual tax bill through investment. This new measure goes some way to replacing the lost relief available from the Super Deduction, which ends on 31 March.”

R&D tax credits also provide an important Corporation Tax relief to many SMEs. In the Autumn Statement, Jeremy Hunt announced changes that would restrict the rate of tax relief and credits for some small and medium-sized enterprises (SMEs).

However, to support “British Ingenuity”, the Government has decided to introduce a new enhanced tax relief for loss-making R&D-intensive SMEs.

Eligible companies will be able to receive a tax credit worth £27 from HM Revenue & Customs (HMRC) for every £100 of R&D investment they make.

“This additional relief will be somewhat limited, but it will play a role in driving growth among the most pioneering businesses,” added David.

To help people save for the future, the Chancellor also announced that from April 2023 the Annual Pension Allowance would increase from £40,000 to £60,000, allowing people to make more tax-free contributions to their pension savings.

Alongside this, the charge on the Pension Lifetime Allowance will be removed this year, before the allowance itself is abolished entirely from April 2024.

David said: “Allowing people to save more into their pensions tax-free will help many business owners and workers reduce the overall amount of tax that they pay, potentially allowing them to keep more of their income outside of higher tax bands, while also helping them to be better prepared for retirement.

“The measures in the Spring Budget should really act as a prompt for businesses and individuals to reassess their current investment plans, business strategies and tax affairs as we prepare to enter a new financial year.”

Starting in April 2024, the Government will gradually implement a program aimed at boosting economic activity and household earnings by offering eligible working parents 30 hours of free childcare per week for children aged nine months until school age.

“A common obstacle to growth for many businesses is the recruitment and retention of workers with the right skills,” said David. “This measure, along with the introduction of ‘returnerships’ to help older people back into work, will play an important role in ensuring employers have the talent they need to be successful.”

To find out more about Clemence Hoar Cummings’s tax, accounting and business advisory services, please visit www.chc.uk.com