Capital Gains Tax
If you are sitting on capital profits – in share portfolios for example -you may wish to consider realising some of those gains before 5 April 2023.
The annual exempt gain amount reduces from £12,300 per person to just £6,000 for gains made in
2023/24. The 2022/23 allowance is lost if not used by 5 April 2023.
Capital gains are taxed by adding the gains to income and then charging at 10%/20%, or 18%/28%
for some property disposals.
Care is needed when selling shares, especially if you want to buy them back again!
Please talk to us before realising any gains so that we can advise you of the estimated tax position.
Reduction in dividend allowance
Another tax change from 6 April 2023 is the reduction in the tax free dividend allowance. This was
£2,000 per person but reduces to £1,000 in April 2023 and reduces again to £500 in 2024. This will
mean additional tax is payable in 2023/24 and, in some cases, people will become liable to tax for
the first time on their dividend income.
Corporation Tax changes
Companies with taxable profits over £50,000 will see an increase in corporation tax payable. From 1
April 2023, the tax rates remain at 19% for profits up to £50,000, but when profits exceed this there
is an “effective” tax rate of 26.5% on the next £200,000 of profits. When profits exceed £250,000, all
profits are taxed at 25%. The effect of this on a company with profits of £250,000 and a 31 March
year end is £250000 *6% extra tax – (25% y/e 31.3.2024 – 19% y/e 31.3.2023) = £15,000 extra tax –
an increase from £47,500 to “£62,500 – which is a 31.5% increase!
Please contact us if you have any queries about any of these changes.
