Overview

This Finance Bill aims to adjust various taxes in the UK, primarily focusing on increasing revenue from energy companies and making changes to income tax, corporation tax, capital gains tax, inheritance tax, and vehicle excise duty (VED).

Description

The bill makes several key changes:

Energy (Oil and Gas) Profits Levy:

• Increases the tax rate from 25% to 35% for accounting periods starting on or after January 1, 2023.
• Reduces the amount of additional investment expenditure that can be offset against the levy from 80% to 29% for expenditure incurred on or after January 1, 2023.
• Extends the levy's duration until March 31, 2028.

Corporation Tax:

• Increases the research and development (R&D) expenditure credit from 13% to 20% for expenditure incurred on or after April 1, 2023. Changes are also made to SME R&D deductions.

Income Tax:

• Keeps the basic rate limit and personal allowance at the same levels (£37,700 and £12,570 respectively) for tax years 2026-27 and 2027-28.
• Amends the calculation of the higher rate limit for income tax from 2023-24 onwards, setting it to £125,140 for several years.
• Reduces the dividend nil rate to £1,000 for 2023-24 and £500 for 2024-25 and subsequent years.

Capital Gains Tax:

• Reduces the annual exempt amount to £6,000 for 2023-24 and £3,000 for 2024-25 and subsequent years.
• Removes indexation of the annual exempt amount.

Inheritance Tax:

• Freezes the inheritance tax thresholds for 2026-27 and 2027-28.

Vehicle Excise Duty (VED):

• Removes VED exemption for most electrically propelled vehicles from April 1, 2025.
• Introduces new VED rates based on CO2 emissions and electric range.

Government Spending

The bill is expected to increase government revenue, primarily through the increased energy profits levy. Specific figures are not provided in the bill text.

Groups Affected

• Oil and gas companies: Will face higher tax burdens.
• Companies investing in R&D: May benefit from increased corporation tax relief.
• Higher-income earners: May face higher income tax due to the changes in higher rate thresholds and dividend allowances.
• Individuals selling assets: Will have a reduced capital gains tax allowance.
• Individuals inheriting large estates: May face higher inheritance tax due to unchanged thresholds.
• Owners of electric vehicles: Will face changes in vehicle excise duty from April 1, 2025.

Powered by nyModel