Key business tax updates from the 2023 Spring Budget

Corporation Tax rates

The expected increase in the rate of Corporation Tax to 25% for many companies from April 2023 will go ahead. This means that, from April 2023, the rate will increase to 25% for companies with profits over £250,000. The 19% rate will become a ‘small profits’ rate, payable by companies with profits of £50,000 or less. Companies with profits between £50,001 and £250,000 will pay tax at the main rate reduced by a marginal relief, providing a gradual increase in the effective Corporation Tax rate.

In addition:

  • Bank Corporation Tax surcharge changes will proceed, meaning that from April 2023, banks will be charged an additional 3% rate on their profits above £100 million.
  • Also from April 2023, the rate of diverted profits tax will increase from 25% to 31%.

Capital allowances

The super-deduction regime, which gives a 130% enhanced first year allowance (FYA) to companies on the purchase of qualifying plant and machinery, came to an end on 31 March 2023. Instead, the Government has announced Full Expensing, a 100% FYA, which allows companies to deduct the cost of qualifying plant and machinery from their profits straight away with no expenditure limit. Qualifying expenditure will include most plant and machinery, as long as it is unused and not second-hand, but will not include cars. Full Expensing will be effective for acquisitions on or after 1 April 2023 but before 1 April 2026.

A 50% FYA for other plant and machinery including long life assets and integral features (known as special rate assets) will operate along similar lines. Full Expensing and the 50% FYA are only available for companies and not for unincorporated businesses.

The Annual Investment Allowance (AIA) is available to both incorporated and unincorporated businesses. It gives a 100% write-off on certain types of plant and machinery up to certain financial limits per 12-month period. The limit has been £1 million for some time but was scheduled to reduce to £200,000 from April 2023. The Government has announced that the temporary £1 million level of the AIA will become permanent and the proposed reduction will not occur. The AIA amounts to full expensing for 99% of businesses. The long-term ambition is to make Full Expensing and the 50% FYA permanent.

The Government will also extend the 100% FYA for electric vehicle charge points to 31 March 2025 for Corporation Tax purposes and 5 April 2025 for Income Tax purposes.

Research and Development (R&D) relief

For expenditure on or after 1 April 2023, the Research and Development Expenditure Credit (RDEC) rate will increase from 13% to 20%, but the small and medium-sized enterprises (SME) additional deduction will decrease from 130% to 86%, and the SME credit rate will decrease from 14.5% to 10%. A higher rate of SME payable credit of 14.5% has been announced and will apply to lossmaking SMEs which are R&D intensive. To be R&D intensive, the ratio of the company’s qualifying R&D expenditure must be 40% or above the company’s ‘total expenditure’ for the period. This equates to a receipt of £27 for every £100 of R&D expenditure.

The increase in the RDEC rate means the UK now has the joint highest uncapped headline rate of tax relief in the G7 for large companies. The Government is currently considering responses to a consultation on merging the RDEC and SME schemes and expects to publish draft legislation for technical consultation in the summer.

Other announced changes to the R&D regime include expanding qualifying expenditure to include the costs of datasets and of cloud computing. All claims for R&D reliefs will have to be made digitally and be accompanied by a compulsory additional information form. Companies will also need to notify HMRC that they intend to make a claim within six months of the end of the period of account to which the claim relates, generally if they have not made an R&D claim in the previous three years. These changes apply to claims in respect of accounting periods which begin on or after 1 April 2023 apart from the additional information form, which will be required for claims made on or after 1 August 2023.

The restriction to relief on overseas expenditure, designed to refocus support towards UK innovation, will now come into effect from 1 April 2024 instead of 1 April 2023.

For further advice on what these changes mean for you and your business, contact Mark Baycroft, Business Tax Partner, or your usual haysmacintyre contact.

Spring Budget 2023: Tax Disputes & Resolutions

Sentences doubled for tax fraud

The Government has announced that the maximum custodial sentence, in relation to the worst cases of tax fraud, has doubled from seven years to 14 years. This indicates HMRC’s intention to increase criminal prosecutions for tax fraud, but that the current maximum prison sentence was not seen as proportionate in relation to some of the tax frauds being investigated.

Consultation on a criminal offence for promoters failing to comply with stop notices

Also announced was an upcoming consultation, in relation to the introduction of a new criminal offence, for promoters of tax avoidance who fail to comply with a stop notice – a legal notice from HMRC to stop promoting a tax avoidance scheme. This indicates that HMRC has seen evidence that stop notices are not being complied with and further highlights HMRC’s intention to criminally pursue those contributing to or facilitating the tax gap in the worst ways. The opening date for the consultation has not yet been announced.

Levelling up HMRC’s capability to collect tax debts

An investment of £47.2 million was announced to build on HMRC’s capability to collect tax debts, which includes support for those who are temporarily unable to pay. We have recently experienced HMRC’s focus turning to bringing in tax liabilities which are due, following the support offered during the pandemic. This is further signalled by the announcement of this new investment. It is unclear what the support for those temporarily unable to pay will be, but with HMRC’s late payment interest rate currently at 6.5%, this has never been more important.

For more on the above measures, or for any tax disputes queries, contact Danielle Ford, Head of Tax Disputes & Resolutions, or Riocard Hoye, Senior Manager.



Spring Budget 2023: VAT measures

Following the 2023 Spring Budget, we have noted some of the VAT measures which will be affected.

Drinks Deposit Return Scheme

When sales are made, which are within the scope of a relevant deposit scheme, no VAT will be charged in relation to the deposit amount.

VAT will be due on any unreturned deposits by the initial seller of a deposit scheme product. The detailed rules will be set in secondary legislation in due course.

Under the Deposit Return Scheme, deposits are charged at each stage of the supply chain, such as the manufacturer or importer, and then on subsequent sales by wholesalers and retailers. The deposit is refunded when the drinks container is returned, so this new measure is designed to simplify the VAT accounting for deposits.

Services supervised by pharmacists

With effect from 1 May 2023, the VAT exemption for healthcare services will be extended to include services carried out by staff directly supervised by registered pharmacists in the UK.

Medicines dispensed on prescription

The zero-rate of VAT on medicines dispensed on prescription will be extended to medicine supplied through Patient Group Directions (PGDs). This measure will be introduced at some point in Autumn 2023.

DIY Housebuilders scheme

People building their own homes, or converting non-residential buildings into buildings to be used as their private residence, have been entitled to reclaim the VAT they incur on the conversion work. This scheme is to be digitised, but perhaps more importantly, the time limit in which a claim can be made on completion of the work is being extended from three months to six months. This time limit has been rigidly enforced in the past, so this extension is welcome.

If you have any queries on the above, or on VAT issues in general, please contact Phil Salmon, Partner and Head of VAT.



Spring Budget 2023: Full summary

On 15 March 2023, the Chancellor, Jeremy Hunt, delivered a ‘Budget for Growth’ after the Office for Budget Responsibility forecast a stronger than expected performance from the UK economy this year, with inflation continuing to fall.

Our summary provides an overview of the key announcements arising from the Chancellor’s Budget, and how they are likely to impact your business and personal finances.

Please get in touch with your usual haysmacintyre contact, or any member of the Tax team, if you have any queries.

Download the full summary below.

Spring Budget 2023: No further tweaks to stealth taxes

Whilst the Chancellor has set out the four pillars of his industrial strategy of enterprise, employment, education, and everywhere, Katharine notes that for the most part, the Chancellor is sticking to his Autumn Statement, where threshold freezes of Inheritance Tax (IHT), Capital Gains Tax (CGT) and Income Tax created stealth tax increases.

Katharine comments: “Successive U-turns over the past year alone have caused significant upheaval and added unnecessary complexity to the tax system, so I am glad to see this Budget does not make further tweaks to stealth taxes. Now, the dust should finally be able to settle, and individuals can start to plan their taxes more effectively.”

You can read Katharine’s comments in Accountancy Age and ePrivateclient (subscription needed).

You can also read our highlights of the Spring Budget here.




Spring Budget – 15 March 2023: Highlights

The Chancellor, Jeremy Hunt, delivered his first Budget this afternoon, promising a Budget for growth. Much attention has already been given to the extension of free childcare to one and two year olds, and the extension of the energy price guarantee to 30 June 2023.

The tax announcements include:

Corporation Tax

  • Corporation Tax Rate: the increase to the main rate to 25% from 1 April will go ahead.
  • Capital Allowances: full relief for capital expenditure for the next three years e.g. on IT equipment, plant and machinery. The intention is to make this permanent.
  • Research and Development Credit (R&D): an enhanced credit of £27 per £100, where 40% or more of (a small or medium) business’ expenditure is on R&D.
  • Cultural tax reliefs for theatres, orchestras, museums and galleries will continue at 45%-50% until 2025.
  • Creative tax reliefs for film, TV and video games to be simplified and modernised.


  • Annual Allowance to increase to £60,000.
  • Lifetime Allowance to be abolished.

Employment: new apprenticeships for the over 50s returning to work (‘returnerships’)

Fuel Duty: frozen for a further 12 months.

12 new investment zones around the UK.

Tax Avoidance Schemes: further measures to tackle schemes to be announced.

Further details will follow in our full summary.

Please contact Katharine Arthur, Partner and Head of Private Client, with any queries.

Get in touch