On 15 March 2023, chancellor Jeremy Hunt presented his first budget. This set out the government’s plans for tax and spending policy.

Here a just a few highlights for limited companies:

Corporation Tax

It was confirmed there are some significant changes to how LTD companies are taxed from April 2023, currently, all net profit is taxed at 19%. This will be increased to the 25% main rate from the new tax year📈

However! The small profits rate is staying at 19% so if your net profit is under £50k for the financial year you will only pay corporation tax at 19%.

Now if your net profit is between £50k - £250K you will pay 26.5% on all net profits over £50k and under £250K. So for example, if your business made £100K net profit, you would pay 19% on the first £50k and then 26.5% on the further £50K.

If your net profit is over £250K you pay 25% on all your net profit.

Under £50K Net Profit – 19%

Between £50K & £250K – 26.5%

Over £250K Net profit -  All at 25%

Dividend Tax Free Allowance

As a Director of a Limited company, you will more than likely be taking a combination of salary and dividends from your business.

In the current tax year (from 6th April 2022) £2K of these dividends are not subject to personal tax, from the new tax year starting 6th April 2033 this tax-free allowance is dropping to £1000 and from the tax year starting 6th April 2024 it is reduced to £500.

Pensions

The amount that you can contribute to a pension that will be eligible for tax relief is increasing from £40k to £60K a year.

This is fantastic news for all you high earners out there who are serious about investing in their future whilst minimising tax (not to mention all of us middle aged girls who are playing catch up with their pensions! Yes that is me 🙋🏼‍♀️).

Our club Personal Finance Expert Gemma Wood gives amazing advice and guidance when it comes to pensions, if you have your own company and you don’t have one, get one set up ASAP, even if you just start with small contributions and increase over time.

Whilst we want to help as much as we can, the information found here is provided solely for informational purposes and should not be considered financial or legal advice.