We have prepared this summary of the 2023 Spring Statement with the best interests of our clients in mind – small businesses and individuals in Scotland. 

  1. Pension Tax Changes – The pension lifetime allowance (the maximum amount of pension savings that would be non-taxable) is now abolished. The annual pension allowance (the maximum amount paid into a pension per year without a tax charge) is also increasing, from £40,000 to £60,000. The government hopes to see professionals working longer or even coming out of retirement.
  1. Corporation Tax Increase – We will be back to the 2015 position of having two rates of corporation tax, increasing to 25% for companies with profits between £50,0001 and £250,000, with a marginal relief deduction. Companies that make a taxable profit of £50,000 or less will continue to pay the ‘small profits rate’ of 19%. Companies with taxable profits of £250,001 or more a year will pay a rate of 25%. 
  1. Capital Allowances – For qualifying plant and machinery investments incurred from 1 April 2023 – 31 March 2026, a full expensing, 100% first year relief allowance has been introduced. For expenditure on special rate (including long life) assets, there will be a 50% first year allowance. By reducing the amount of taxable profits, capital intensive entities are granted some relief. 
  1. Energy Price Guarantee Extension – The Chancellor granted a three-month extension on the energy price cap at £2,500 per year until June 2023. By limiting how much suppliers can charge per unit of energy, it is hoped to support individuals struggling with the cost of living criss. For businesses, the new Energy Bills Discount Scheme will take effect from April 2023, giving a per-unit discount on wholesale prices for a further year.
  1. Raising Capital – The amount of equity capital a company or entrepreneur can raise through the Seed Enterprise Investment Scheme will increase from £150,000 to £250,000. The maximum an investor can subscribe for shares under SEIS will double from £100,000 to £200,000 per year.
  1. New R&D Tax Credit – The rate of research and development payable tax credit will be cut from 14.5% to 10% from April 2023. However, slight relief is granted to small and medium-sized businesses who spend 40% of expenditure on research and development qualify as “R&D intensive”, and the payable tax credit remains at 14.5%. Meaning they will be able to claim a credit worth £27 for every £100 they spend.
  1. Fuel Duty – Coming to the aid of travel intensive businesses, the forecasted 11p rise in fuel duty is cancelled. The previously introduced 5p cut will remain for another year. 
  1. Small Business Consultations and Reviews – The Chancellor plans to introduce consultations to increase cash basis accounting. This will allow businesses to more simply record income and expenditure at the incoming or outgoing date, rather than on the date of invoice. The hope is to make the tax system easier for small businesses. 
  1. Investment Zones – Twelve new Investment Zones have been announced. Each zone can choose specialised tax relief and grant funding systems to incentivise apprenticeships, provide specialist business support and improve local infrastructure for example through enhanced rates of capital allowance and relief from Stamp Duty Land Tax.
  1. Increased Focus on Tax Collection – HMRC have been allocated additional funding of £47m to boost their tax collection capabilities. Initiatives include enhancement of the online “Self-Serve Time To Pay” service coupled with heightened chasing activity. This may increase the risk of pushing marginally viable businesses into insolvency.