2023 key dates for property businesses

Corporate taxes

Rates

From 1 April 2023, the main rate of corporation tax will increase to 25% for companies whose profits exceed £250,000 but will remain at 19% where profits are less than £50,000.  Marginal Relief is available where profits fall between the two thresholds.  The thresholds are reduced by the number of associated companies.  This goes beyond just group companies.

If possible, consider:

• Accelerating profits so that they are taxed before the new rates are effective;
• Consider delaying expenditure where relief may be obtained at a higher tax rate (except where it may be beneficial to claim the super-deduction, see below);
• Review the use of any losses to ensure maximum tax relief is claimed;
• Consider the impact of associated companies and whether restructuring would be beneficial.

Investment in capital expenditure

The Super Deduction available on qualifying capital expenditure ceases on 31 March 2023.  This provides 130% allowances against new plant and machinery that is not special rate expenditure, for example those that qualify as integral features.

Where you are considering capital expenditure you may wish to accelerate any plans to maximise on the use of the super deduction before 31 March 2023.

Annual Tax on Enveloped Dwellings (“ATED”)

ATED is an annual charge on UK dwellings held by non-natural persons, namely companies.  It applies where a dwelling has a valuation in excess of £500,000.  For the 2023/24 tax year, the property valuation will be based on a new revaluation date of 1 April 2022 (the last being 1 April 2017), or its cost if acquired after this date. The filing and payment deadline is 30 April 2023.

A relief from an ATED charge can be available where the property is being used in a qualifying business.  This can include a rental business or property development business providing the properties are not available to use to a connect person, even where full market rent is being paid.

An increase in value may bring a previously held property into the regime or push one into a higher band.  A review of all residential property interests held as at 1 April 2022 is therefore recommended to ensure you are compliance with this regime and to avoid any penalties for non-filing.

Research & Development Claims

For property businesses involved in or looking to be involved R&D, for accounting periods starting on or after 1 April 2023, several changes are being introduced, including:

• For small and medium sized entities, the additional deduction on qualifying R&D spent will reduce from 130% to 86%
• Where losses are being surrendered for cash, then the repayable credit equivalent reduced from 14.5% to 10% from this date
• For those claiming under the RDEC scheme the current 13% rate increases to 20%

Administratively, you also need to be aware of the following changes:

• For first time claimants, or those without a claim in the preceding 3 accounting periods, a ‘claim notification’ must be submitted to HMRC within 6 months of the end of the accounting period
• Claims must be made digitally and include detailed costs
• Claims must also be endorsed by a named senior company official and include details of any advising agents

Residential Property Developer Tax (“RPDT”)

The RPDT for companies’ profits from UK residential development activities exceeding £25 million continues to be in place for accounting periods ending on or after 1 April 2022.  This will result in a 4% tax charged on profits.

Individual taxes

Rates

The rates of Income Tax on non-dividend income for the 2023-24 Tax Year are as follows:

• Basic rate (£37,700) – 20%
• Higher rate (£37,701 – £125,140) – 40%
• Income in excess of (£125,140) – 45%

An individuals’ personal allowance is £12,570 subject to the restrictions which apply when their taxable income exceeds £100,000.

The Capital Gains Tax Annual Exemption reduces from £12,300 to £6,000 from 6 April 2023.

Making Tax Digital (“MTD”)

HMRC have announced that MTD for Income Tax Self-Assessment has been postponed to April 2026 for the individuals with gross income more than £50,000 and April 2027 for those with gross income between £30,000 to £50,000.

VAT

For VAT periods starting on or after 1 January 2023, the default surcharge regime, which penalised the late submission or payment of VAT returns, will be replaced by a new penalty regime if a return is submitted late (including nil or repayment returns) or there is a late payment.

• Late returns will generate fixed penalties (of £200) based on a points system.
• Late payments will generate penalties based on a percentage of the tax due depending on when they are paid. In addition, unlike previously, any late payment of VAT returns will incur a daily interest charge which is now calculated at the Bank of England base rate plus 2.5%.

This new penalty regime is designed to be fairer and more commercial.

For further information and advice, please visit our contact us page to speak with a member of our team.