Autumn budget - key takeaways and actions for agency owners.

The dust has now settled on the Autumn budget and (so far) there have been no U-turns, so it feels like it’s time for us to run through the changes and how they are likely to affect you. We’ve also outlined some tax-saving strategies that you may want to consider to help reduce your tax bills.

Corporation Tax 

So the Chancellor has confirmed that Corporation Tax rates for companies will increase from April 23.


Companies with profits of up to 50k will remain at 19% but companies with profits greater than 250k will be taxed at 25%. Companies with profits somewhere in between 50k and 250k will be taxed on a sliding scale between 19% and 25%


Tax planning opportunity:

  • If you expect to earn profits of more than 50k then you could choose to postpone any non-essential spending until after April 23 when you’ll be able to save tax at a higher rate.

R&D Tax Relief

From April 23 there will be a reduction in R&D rates. This will be painful for many businesses who have come to rely on this relief over the years to reduce their tax bill and improve cash flow.


The enhancement in expenditure will reduce from 120% to 86%. So, for example, 100k of eligible spending today will be enhanced to 230% but next year it will only be enhanced to 186k.


In addition, the rate of R&D tax credit will fall from 14.5% to 10%


Tax planning opportunity: 
  • Where you can afford to, invest in R&D before April 23. Remember that R&D is calculated on a cash basis so this means the payments must all be made before April to be eligible.

Income Tax

There are several changes to both income tax rates and income tax thresholds which means that whatever your situation, you’re likely to end up paying more tax personally next year than you do now. These changes are:


  1. The additional rate threshold has been reduced from 150k to 125k. So when your total personal income goes over 125k you’ll be subject to the additional tax rate of 45%.
  2. The personal allowance is being frozen until 2028. Because of inflation, this means that in real terms you’ll start paying tax earlier in future than you do now.
  3. The tax-free dividend allowance, which is currently 2k p/a, will reduce to 1k p/a for 2023/24 and 500 for 2024/25.


Remember that, because you start to lose your personal allowance when your income goes over 100k, the effective rate you pay tax already starts to increase significantly.


Tax planning opportunity: 
  • Review your salary versus dividend split for the next 2023/24 tax year. 
  • Increase company contributions into your personal pension scheme in 2023/24. At the moment your employer can contribute up to 40k a year into a pension scheme with no tax implication for you personally. This also has the additional benefit of reducing your company’s corporation tax.

Capital Gains

The capital gains allowance is reducing from 12,300 this year to 6000 in 2023/24 and then further to 3000 in 2024/25.


Tax planning opportunity: 

If you do have plans to sell an asset at a profit in the near future, then consider doing this before the end of March 23. This could include activities such as gifting or selling shares to employees, selling a second property or even selling your whole business.


As is always the case, the phrase ‘the tail should not wag the dog’ applies here. In this context, it means that your tax situation should not dictate your business strategy. However, if a sale is already on your radar, and it is just a case of bringing it forward a couple of months, then this is a strategy worth considering.

We can help.

If you would like help in working out what to do to manage your own unique tax situation, please get in touch and one of our experienced accountants will be able to advise you on what the best way forward is for you and your business.