Impact on Individuals

Alcohol Duty will be frozen until August 2023 and then will increase in line with RPI. Draught relief will increase from 5% to 9.2% for beer and cider draught products and from 20% to 23% for wine, spirits based and other fermented draught products. These changes will take effect from 1 August 2023.

Pensions Allowances

One major announcement was in relation to Pension tax allowances. The increase to the Pension Annual Allowance was widely reported in the media prior to the Budget and as expected was increased from £40,000 to £60,000. In addition, the adjusted income threshold was increased from £240,000 to £260,000, and the Tapered Allowance and Money Purchase Annual Allowance was increased from £4,000 to £10,000. However the welcome surprise was the complete abolition of the Lifetime Allowance (LTA). No one will face a LTA charge from April 2023, and this measure also removes the need for individuals to rely on protections from previous decreases to the LTA.

Income Tax

The personal allowances and income tax rate bands for 2023/24 remain at the levels already announced.
Personal Allowance £12,570
Tax free dividend allowance £1,000
Basic rate 20% on income £12,571 to £50,270 – dividends 8.75%
Higher rate 40% on income 50,271 to £125,139 – dividends 33.75%
Additional rate 45% on income above £125,140 – dividends 39.35%

As previously announced the capital gains tax annual exemption will be reduced from £12,300 to £6,000 from 6 April 2023. 
The starting rate for savings will be frozen at £5,000. The savings rate can allow individuals with less than £17,570 in employment income to receive up to £5,000 of savings income free of tax. Annual subscription limits for Junior Individual Savings Accounts (ISA) and Child Trust Fund accounts will remain at £9,000 and the annual subscription limit for adult ISAs will remain at £20,000.

Increased relief will be available to foster carers and shared lives carers. The threshold of income at which qualifying carers will pay tax on care income will be increased to £18,140 per year plus £375 - £450 per person cared for per week for 2023-24.  

The government will restrict charitable tax reliefs to UK charities and Community Amateur Sports Clubs only from April 2023 - protecting the Exchequer and focusing UK taxpayer money on UK charities. European Union (EU) and European Economic Area (EEA) charities that HMRC has previously accepted as qualifying for charity tax reliefs before 15 March 2023, will have a transitional period until April 2024.

Self Assessment

With increased popularity in crypto asset investments, the government will be introducing changes to the Self Assessment tax return forms requiring amounts in respect of cryptoassets to be identified separately. The changes will be introduced on the forms for tax year 2024-25.
Simplification for trusts and estates – To simplify administration, the government will formalise and extend an existing income tax concession which removed trusts and estates from Income Tax where the only source of income was savings interest and the tax liability was below £100. 
The government will consult on expanding the cash basis which is a simplified way for sole traders to calculate and pay their income tax with the aim of increasing the number of eligible businesses that can use it.

Capital Gains Tax

New anti-avoidance legislation will be introduced to prevent the avoidance of a charge to capital gains tax by using an unconditional contract. The changes will apply in relation to contracts entered into on or after 1 April 2023 for corporation tax and 6 April 2023 for Capital Gains Tax.
The date of 6 April 2023 also sees the introduction of the provisions previously announced regarding CGT on separating couples.

This measure makes changes to the rules that apply to transfers of assets between spouses and civil partners who are in the process of separating. Separating spouses or civil partners are to be given up to 3 years, after the year they cease to live together, to make no gain or no loss transfers of assets, and unlimited time when the assets are the subject of a formal divorce agreement. This makes the process fairer for those spouses who are separating or divorcing and are in process of distributing assets between themselves.

Inheritance Tax

Some measures were not included in the Chancellor’s speech such as the geographical scope of agricultural property relief and woodlands relief from inheritance tax. The government will restrict the scope of agricultural property relief and woodlands relief from inheritance tax to property in the UK from 6 April 2024. Previously, agricultural property situated in EU and EEA areas would attract relief.