On Wednesday 15th March 2023, Chancellor Jeremy Hunt announced the details of the Spring Budget, with a focus on getting people back into work and boosting the economy.
Here’s what you need to know as a limited company contractor:
NIC / National Living Wage / National Minimum Wage
As promised in the Autumn Statement, both the National Living Wage and National Minimum Wage will be increased from the 1st of April 2023.
These rates are:
- £5.28 an hour for apprentices
- £5.28 an hour for 16-17-year-olds
- £7.49 an hour for 18-20-years-olds
- £10.18 an hour for 21-22-year-olds
- £10.42 an hour for those 23 years old and over
For 2023/24, the government will increase the Class 2 and Class 3 NICs to £3.45 per week and £17.45 respectively.
Vehicles / Fuel
The rates of tax for company cars are remaining frozen until 2024/25.
Fuel duty has also been frozen so that the 5p cut on petrol and diesel, which was due to end in April, will remain so for another 12 months.
As detailed in the Autumn Statement, from April the government will reduce the dividend allowance from £2,000 to £1,000. This will then drop again to £500 from April 2024.
The rates at which dividends are taxed will remain as:
- Basic rate – 8.75%
- Upper rate – 33.75%
- Additional rate – 39.35%
In a bid to encourage those over 50 to return to work, the government is introducing legislation around pensions.
These will come into effect from the 6th of April 2023 and include measures such as:
- Ensuring nobody will face a Lifetime Allowance charge.
- Changing the taxation of the Lifetime Allowance excess lump sum, serious ill-health lump sum, defined benefits lump sum death benefit, where they are currently subject to a 55% tax charge above the Lifetime Allowance, to taxation at an individual’s marginal rate.
- Increasing the Annual Allowance from £40,000 to £60,000.