By James Gransby
Fears that the Chancellor would raise rates of capital gains tax, which would have affected doctors looking to close their company and extract the money as capital, failed to materialise in the Budget.
However, corporation tax rates for some increase to 25% from April 2023 in a move to show that Rishi Sunak is looking towards profitable corporates in order to shore up national finances.
In a move which has been forecast to raise nearly £48bn in the period to 2026, businesses with over £250k profit will pay an extra 6% corporation tax from April 2023, with those earning less than this amount having a taper between the current 19% rate and the new 25% top rate.
This may leave some independent practitioners running their private work through a company to question whether it is now tax-efficient.
As reported elsewhere on this website, in a widely predicted move, the lifetime allowance limit for pensions has been frozen at £1,073,100 for the tax years up to and including 2025-26.
This would affect anyone expecting to draw an NHS pension of over £46,656 and with this limit now being frozen, more people will be caught by this tax charge. The effect is an extra £21,000 tax charge on the pension pot at retirement.
Personal tax bands were not changed, although the allowances have been frozen from next year, a move which will generate a further £19bn by 2026.
If they had increased by inflation, then the current £50k basic rate threshold might have been expected to rise to nearer £55k, and so this element of income would now be taxed at 40%/45% tax rates rather than the 20% rate, leading to up to £100 per month extra tax to be paid by those earning over £55k.
James Gransby (right) is a tax specialist and partner at RSM accountants