The Chancellor recently announced two significant modifications to the Capital Allowances (CAs) framework. Firstly, the legislation will be amended to prevent businesses whose accounting period spans 1 April 2023 from facing an unintentional restriction on their Annual Investment Allowance (AIA). The second change is exclusive to companies and is more noteworthy. The Super-deduction, which permitted companies to claim a tax deduction of up to 130% on purchases of plant and machinery, concluded on 31 March 2023. However, the Chancellor has introduced a successor in the form of a "full expensing" allowance from 1 April. This updated allowance enables companies to claim CAs for the entire cost of qualifying expenditure incurred during the accounting period, in addition to the AIA.
The Chancellor has recently announced changes to the Pensions Lifetime Allowance (LTA) in response to a press campaign highlighting how working-class families have been facing tax consequences due to the shrinking pension savings exemption in recent years. From 6 April 2023, the Chancellor has eliminated the tax, meaning the LTA has been abolished. Ironically, the press criticised the move for benefiting only the wealthy, indicating that it is impossible to please everyone.
Aside from the LTA changes, the Chancellor has also modified the tax relief regulations for pension contributions, specifically the Annual Allowance (AA). Starting 6 April 2023, the number of pension contributions eligible for tax relief per year will increase from £40,000 to £60,000. Moreover, the Money Purchase Annual Allowance (MPAA) has been significantly increased, which limits tax relief on contributions where individuals have withdrawn money from their pension savings.
It is worth noting that the higher MPAA provides an opportunity for pension recycling, which refers to obtaining double tax relief on pension savings.
As a business owner, the upcoming changes in the UK Budget for 2023 can be daunting. At Elena Meskhi & Co, we understand the importance of staying informed and adapting to changes in regulations and policies. Our team of experienced accountants and tax specialists can provide you with the support and guidance you need to navigate the challenges presented by the Budget. From identifying new tax opportunities and incentives to ensuring compliance with new regulations, we can help you make the most of the changes while minimising any negative impacts. With our help, you can have peace of mind knowing that your business is in good hands and that you have the resources and expertise to succeed in the changing landscape of UK taxation. Contact us today to learn more about how we can help you overcome the challenges of the UK Budget 2023.
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