There were high expectations by landlords of further reforms in the budget, and sadly many opportunities to improve the situation for landlords were missed. Here is a summary:
• Corporation Tax: This has been confirmed as announced almost 2 months ago that the Main Corporation Tax Rate from 1st April 2023 is 25%, Small company rate with less than £50,000 profits will remain at 19%, and a marginal rate of 26.5% for profits between £50,000 and £250,000. Close Property Investment Companies and Close Property Holding Companies will be paying corporation tax at 25% from april 2023 as they do not qualify as Small Companies, but majority of Incorporated landlords will qualify as small company if their net rental profits are less than £50,000.
• Capital Gains: The reporting deadline for all disposals has been extended to 60 days from 30 Days, which is welcome news as HMRC own software was not working for several months and only went online in August 2021.
• Enquiries and Investigations: HMRC have been granted more powers and Retrospective legislation has been extended for businesses under declaring their income, what HMRC call “hidden economy”. As Accountants we are aware of many occasions where we feel HMRC have abused their powers, and pro-longed enquiries. Also new rules will be introduced giving HMRC new powers to apply additional penalties to UK entities deemed to promote Tax avoidance Schemes. Can I make it absolutely clear, Tax avoidance is perfectly legal, as long as it is approved by HMRC under DOTAS.
• Annual Investment Allowance: The £1 million allowance has been extended to 31 March 2023, so time to reinvest in plant and machinery and enjoy the allowance while it lasts.
• Sole traders and Partnerships Basis Period: This is where the accounting period had to be split within tax years for calculating overlap profits and cessation and losses. Subtle change but making life a lot easier for accountants & accounting software
If you would like to know more about any aspect of the budget please get in touch.