With the UK economy flat-lining the Chancellor is under pressure to announce measures to stimulate growth. There are even calls for him to cut corporation tax which is scheduled to increase from 1 April 2023. He may also extend the 130% super-deduction for investment in new plant and machinery which is due to end on 31 March.
The main focus of the Government continues to be reducing inflation, but Jeremy Hunt may have a few surprises up his sleeve to announce on 15 March. One issue he may address is the large number of workers over 50 taking early retirement, particularly in the medical profession. One tax change that may encourage them to continue working would be raising the current £1,073,100 lifetime cap of pension savings.
Only time will tell what will be said in the 15 March Budget but do keep your eyes peeled for our Budget Newsletter.
Year-End Tax Planning
It’s not too late to undertake some end-of-year tax planning. If you have available funds, an obvious tax planning point would be to maximise your £20,000 ISA allowances for the 2022/23 tax year.
You might also want to consider increasing your pension savings before 5 April 2023, if you have available ‘pension annual allowance’ to obtain tax relief for any additional contributions. The pension annual allowance includes any unused elements from the last three tax years as well.
Under the current rules, the government adds to your pension contributions at the 20% basic rate. For instance, if you save £4,000 in a personal pension the government tops this up to £5,000. Then, if you are a higher rate (40%) taxpayer, there is a further £1,000 tax relief given when your tax liability is calculated, reducing the net cost to £3,000. This can be even more effective if your income is between £100,000 and £125,140 where the effective tax rate is 60% due to the restriction of your personal allowance.
You might also want to consider making capital disposals and accelerating capital gains into 2022/23 if you haven’t yet used your £12,300 capital gains tax annual exempt amount. This annual exemption will reduce to just £6,000 for gains made in 2023/24.
There are other useful tax planning points we can discuss as well, including in relation to profit extraction from owner managed businesses and in gifting inheritances. Please do get in touch if you’d like to discuss the best strategies for your circumstances.
Advisory fuel Rates for Company Cars
The table below sets out the HMRC advisory reimbursement rates for employees’ private mileage using their company car from 1 March 2023. Where full reimbursement is made there is no taxable fuel benefit. The rates for the previous quarter, if different, are in brackets.
| Engine Size | Petrol | Diesel | LPG |
| 1400cc or less | 13p (14p) | 10p | |
| 1600cc or less | 13p (14p) | ||
| 1401cc to 2000cc | 15p (17p) | 11p (12p) | |
| 1601 to 2000cc | 15p (17p) | ||
| Over 2000cc | 23p (26p) | 20p (22p) | 17p (18p) |
Note that for hybrid cars you must use the petrol or diesel rate and for fully electric cars the rate is now 9p per mile (8p per mile up to 28 February 2023).
You can continue to use the previous rates for up to 1 month from the date the new rates apply.
