Managing Principal Viewpoint
25 April 2023
I hope you’ve enjoyed the additional daylight and spring’s sights and sounds in recent weeks. In times dominated by change and challenges, it’s reassuring to see signs of resilience and regeneration in the natural world.
It offers a timely reminder that as humans we too have a capacity for adaptation and ingenuity in the face of adversity.
With a new fiscal year underway, there are indeed several changes to navigate and in this Spring Shipshape we have plenty of advice and reminders to help.
Since my last viewpoint, while there hasn’t been the political upheaval of 2022, things still haven’t been easy for many. Higher costs across multiple fronts continue to affect organisations and individuals alike.
In March though, it was announced the UK would avoid going into recession in 2023 with the Office of Budget Responsibility (OBR) expecting the economy to shrink by 0.2%. This was a significantly better percentage than previously forecast.
In his Spring Budget (see page 2), Chancellor Jeremy Hunt remained resolute in his ambition to significantly reduce inflation by the end of the year, lower the national debt and grow the economy.
In recent weeks we’ve also seen the UK banking sector showing strength and resilience in the face of turbulence in the US and Switzerland.
Shoring up to grow
Returning to the Budget, there was a strong sense of the Chancellor still trying to stabilise things. This meant very few short-term relief measures. Energy support for households was extended for three months until the end of June.
For businesses, the Energy Bill Relief Scheme has been replaced by the less generous Energy Bills Discount Scheme for the period 1 April 2023 to 31 March 2024.
The free childcare extension is welcome news to support working families, help employers trying to retain talent and bolster the labour market. However, it won’t be phased until April 2024.
There were also adjustments to pension allowances, once again to encourage people to work for longer and boost the UK workforce.
A new era for corporation tax
For businesses, it was good to see a fresh incentive for capital investment, as the super deduction allowance ends. Do talk to us about the opportunities the new allowance offers for business investment. It may also help some businesses to counter the impact of the corporation tax rate increases that came into force this month.
Given those changes, we have a corporation tax special on pages 4 and 5 addressing considerations such as director remuneration and also the changes to research and development reliefs.
As more businesses trade and grow on an international scale, it is common to establish subsidiaries in different territories. On page 3, we have explained the pitfalls to avoid when it comes to transfer pricing calculations between different parts of an international group.
Also on the theme of growth, we are very grateful to Alhassan Goussous for sharing his experiences in building a highly successful fast-food franchise chain during a tough economic climate (see page 8).
Pensions, personal finances and property
In addition to the pension changes announced in the Budget, there was a welcome development for those who still need national insurance (NI) years between 2006 and 2016 to qualify for a full state pension.
To give people more time to fill in the gaps, the government has extended the deadline to 31 July 2023. See our recent article about buying NI years.
In the face of rising costs, many people are looking to find additional income. In our Money Matters section on page 10 we highlight tax implications of letting out your home on sites like Airbnb, as well as capital gains tax and capital losses in relation to cryptoassets.
And in response to many property and tax-related questions we’ve answered in recent months, we have a property special on page 7.
Here to help
The new fiscal year will bring a tougher tax environment for many. Changing rates, reductions in some allowances and threshold freezes will have an impact on people’s finances.
At Shipleys we remain resolute in our commitment to help and are following all the latest developments to guide our clients. Do call on us if you need any advice and support in the months ahead.
Steve Foster, Managing Principal
Shipshape articles are intended to create awareness of issues and specific advice should be obtained before taking action, or refraining from taking action in relation to the topics covered. If you would like advice or further information, please speak to your usual Shipleys contact.
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