What you need to know about tax changes in 2023

In this article, we discuss;

Increase in Corporation Tax
National Insurance
New regime for VAT penalties
Income tax additional rate threshold
Changes in Research and Development tax relief
Cancellation of Health and Social Care levy
Making Tax Digital
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Estelle Hardwick

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About Estelle Hardwick

Estelle is the Director of AMR, overseeing the Tonbridge, Tunbridge Wells and Chatham branches. She makes sure that AMR provides exceptional support to each and every client.

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As always, a new tax year means changes about which businesses need to be aware. Developments over the last six months have made it even more vital to keep on top of government policy. Check our list below and ensure your business is up to speed.

Increase in Corporation Tax

From April 2023 the main rate of corporation tax will be rising from 19% to 25%, which will affect companies with profits of £250,000 and over. The current rate of 19% will still apply if your company’s profits are £50,000 or less.

National Insurance

For the tax year 2023/24, the class 2 rate will be £3.45 a week and the voluntary class 3 rate will be £17.45 a week. The level at which employers start to pay Class 1 Secondary NICs for their employees will be fixed at £9,100 from April 2023.

New regime for VAT penalties

A new penalty regime which came into place in January 2023 has replaced the long-standing default surcharge regime for the late submission of returns and/or late payment of associated VAT. The new regime will operate a points-based system under which a fixed penalty of £200 will be applied when a threshold of points accrued for late filing is reached. This is intended to penalise companies with persistent issues rather than those which commit a one-off lapse.

Income tax additional rate threshold

The ART (Income Tax Additional Rate Threshold) will be lowered from £150,000 to £125,140, which is the level of income at which an individual will not have a personal allowance.  This is because £1 of the Personal Allowance is withdrawn for every £2 of income above £100,000 from 6 April 2023.

Changes in Research and Development tax relief

There will be an important reduction in the tax relief available to qualifying SME companies from 1 April, when the current 230% tax relief is reduced to £186%. For companies considering R&D expenditure, the effect of this reduction, in conjunction with the reduction in the credit rate, will reduce the repayable credit for loss-making SMEs from £33.35 per every £100 to £18.60. For non-SME companies there will be an increase of 7% in R&D Expenditure Credit.

Cancellation of Health and Social Care levy

The introduction of a Health and Social Care levy tax in April 2023 has been cancelled, and the temporary 1.25% increase in National Insurance rates has been reversed for the rest of the financial year.

Making Tax Digital

The government has announced that due to challenging economic circumstances the start date for MTD has been put back yet again for self-employed businesses and landlords. If your business turnover or property income is over £50,000 compliance with MTD will be required by 6th April 2026. If your turnover is over £30,000 compliance will be required by April 2027.


At AMR Bookkeeping Solutions, we’re experts at deciphering the regular twists and turns of government tax policy and applying them to your business. Call 01892 559480 or get in touch with our expert team via our website.

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