Photo from Pexels.

National Minimum Wage

The Government has announced the rates of the National Living Wage (NLW) and National Minimum Wage (NMW) which will come into force from April 2023. In doing so, it has accepted in full the recommendations of the Low Pay Commission.

The rates which will apply from 1 April 2023 are as follows:

• For those aged 23 & over – NLW rises to £10.42 per hour (Note this used to apply to only those aged 25 and over)
• For 21- and 22-year-olds the rate will be £10.18 per hour
• For those aged 18 – 20 it will be £7 .49 per hour
• For those under 18 it will be £5.28 per hour
• The apprentice rate will rise to £5.28 per hour.

The standard employee personal tax allowance (no income tax or employee NI) for the 2023 to 2024 tax year is: £242 per week; £1,048 per month; £12,570 per year.

Income Tax

The income tax rates for 2023/24 are therefore:

• Basic tax rate at 20%: Up to £37,700.
• Higher tax rate at 40%: From £37,701 to £125,140.
• Additional tax rate at 45%: Above £125,140.

Employment allowance for employer NI - £5000

Tax Rates 

For FY2023 (from 1 April 2023) profit tax rates are as follow:

• Spring Finance Bill 2023 increases the main rate of Corporation Tax to 25% in April 2023 for companies with taxable profits above £250,000. 
• The 19% rate will continue to apply to companies with profits below £50,000.
• Where profits are between £50,000 and £250,000 marginal rates will apply.
• Diverted Profits Tax will also increase from 25% to 31% in April 2023.
• Marginal Relief provides a gradual increase in the Corporation Tax rate between the small profits rate and the main rate.
• HMRC has launched a new online service– you can use this link to calculate marginal relief for Corporation Tax from 1 April 2023.
• As an example. the Effective rate of Corporation Tax for a business with no associated companies at various profit levels will be:

Dividend Allowance

Dividend allowance is reduced from £2,000 to £1,000 from April 2023 and to £500 from April 2024. The threshold of £2,000 has been in place since April 2018. From 6 April 2022, dividends are taxed at 8.75% (basic rate), 33.75% (higher rate) and 39.35% (additional rate).

VAT 

No further changes to the VAT thresholds have been announced in Budget 2023, and the VAT registration and deregistration thresholds at £85,000 will not change for a further period of two years from 1 April 2024.

How can Right Accounts help?

Contact Right Accounts on 0113 323 5783 if you would like further information about details included in Budget 2023 or if you need any assistance with the preparation and submission of your business accounts https://www.right-accounts.co.uk/Ltd-Companies or self-assessment tax returns https://www.right-accounts.co.uk/tax-return to HMRC.