UK corporate tax rate hike reversed to ‘support economic growth’

Changes to the IR35 employment tax rules introduced in April 2021 will also be repealed from April 2023, to shift responsibility for compliance to individuals rather than their employers, the Chancellor has announced.

“At first glance, this might seem like great news for businesses – that is, if you haven’t already spent the time and money to comply with the rules and now have to undo those changes,” Walker said. “Businesses should also be aware that the government has said it will monitor compliance, so we may well see further changes. There is also uncertainty for businesses currently dealing with HMRC compliance requests.”

To increase private sector investment, changes are also being introduced in the Seed Business Investment Scheme (SEIS). The maximum investment amount will increase from £100,000 to £250,000. The gross assets test threshold will also be increased to £350,000 and the maximum age limit raised to three years, allowing more businesses to qualify. These changes are expected to help the more than 2,000 businesses a year that use the program grow.

Tax expert Peter Morley said: “The Chancellor has made it clear today that tax incentives will be at the forefront of the growth plan and it is good news for those looking for investments that the SEIS, EIS and VCT will continue at a time when the cost of borrowing is rising, causing companies to consider a range of financing options.

“Companies will also welcome changes to the incentives to share – to the Company’s Stock Option Plan (CSOP). For many years, the value of shares under a CSOP has been limited to £30,000 on grant date, which over time has limited its use. Doubling the limit to £60,000, alongside a relaxation of some share class restrictions, will make CSOP more accessible,” he said.