Posted: Sat 30th Sep 2023
There are several new rules and regulations small business owners need to be aware of in 2023. Here's a summary. We are keeping this post updated.
1 January 2023: New HMRC late submission penalty system
The government is changing the sanctions for late submission of tax returns and late payment of taxes.
Financial penalties will no longer be automatically applied. Instead, taxpayers will incur a certain number of points before a fine is levied.
HM Revenue & Customs says the new system is designed to only penalise those who persistently miss their obligations rather than those who make occasional mistakes.
The changes initially apply to VAT customers for accounting periods beginning on or after 1 January 2023.
1 April 2023: Corporation tax increase
Corporation tax increased from 19% to 25% for businesses with profits over £250,000.
Businesses with profits below £50,000 pay a 19% small profits rate. Businesses with profits between £50,000 and £250,000 pay the main rate reduced by a marginal relief which provides a gradual increase in the effective corporation tax rate.
1 April 2023: Energy support for businesses
The Energy Bills Relief Scheme, which provides a 50% discount on energy bills for businesses, closed on 31 March and was replaced with the new Energy Bills Discount Scheme from 1 April 2023 until March 2024.
The new scheme provides significantly reduced support for most businesses.
There is extra support for businesses in energy and trade intensive industries. If you were eligible to apply for this scheme on or before 26 April 2023, applications closed on 25 July 2023. After 25 July 2023, you can only apply if you became eligible after 26 April 2023.
1 April: Research and development tax relief
For expenditure on or after 1 April 2023, the SME R&D tax relief scheme decreased from 130% to 86%, while the SME credit rate will decrease from 14.5% to 10%.
In the 2023 Budget the government announced an increased rate of relief for loss-making R&D intensive SMEs. This applies to around 20,000 companies investing at least 40% of their spending in R&D. They will receive £27 from HMRC for every £100 of R&D investment.
1 April 2023: National Living Wage and National Minimum Wage increases
The hourly rates increased as follows:
Workers aged 23 and over: £10.42 (up from £9.50)
Workers aged 21 and 22: £10.18 (up from £9.18)
Workers aged 18-20: £7.49 (up from £6.83)
Workers aged under 18: £5.28 (up from £4.81)
Apprentices: £5.28 (up from £4.81)
1 April: Full expensing capital allowances
Replacing the the super-deduction, which ends on 31 March 2023, is a new full expensing first year allowance, which runs from 1 April 2023 until 31 March 2026.
This is less generous than the super-deduction but it means that companies can write off the full cost of qualifying main rate plant and machinery investment in the first year of investment.
1 April 2023: Business rates
Business rates (also known as non-domestic rates) are based on a property's 'ratable value'. Rateable values are regularly reassessed in a process known as a 'revaluation'.
The next revaluations of non-domestic properties in England, Scotland, Wales and Northern Ireland apply from 1 April 2023. In England, Wales and Scotland, ratable values reflect the property market at 1 April 2021 and in Northern Ireland, on 21 October 2021.
1 April 2023: Business rates in England
As announced in the government’s 2022 Autumn Statement, business rates multipliers for 2023-24 were frozen at 49.9p and 51.2p, instead of the previously planned increases of 52.9p and 54.2p. The government said this means bills will be 6% lower than without the freeze, before any reliefs are applied.
The Retail, Hospitality and Leisure (RHL) relief scheme increased from 50% to 75% for 2023-24, up to £110,000 per business. The government said it amounts to a £2.1bn saving for around 230,000 business properties.
A £1.6bn Transitional Relief Scheme was introduced that caps bill increases caused by changes in rateable values at the 2023 revaluation. The 'upward caps' will be 5%, 15% and 30%, respectively, for small, medium, and large properties in 2023-24. The government said 700,000 businesses will be supported by this scheme over three years.
1 April 2023: Business rates in Wales
The business rates multiplier was frozen at 53.5p.
A transitional relief applies to all properties that see their business rates bill increase by £300 or more as a result of the 2023-26 revaluation. The scheme will reduce the increase by 67% in 2023-24, 34% in 2024-25, with the property being liable for the full bill in 2025-26.
The Retail, Hospitality and Leisure (RHL) relief scheme increased from 50% to 75% for 2023-24, up to £110,000 per business. Businesses need to apply for the relief via their local authority.
1 April 2023: Business rates in Scotland
The 'basic property rate' was frozen at 49.8p, with two higher rates of 51.1p and 52.4p.
The Small Business Bonus Scheme (SBBS) relief was reformed and extended. 100% relief is available for properties with a rateable value of up to £12,000 and the upper rateable value for individual properties to qualify for SBBS relief will be extended from £18,000 to £20,000.
SBBS relief for properties with a rateable value between £12,001 and £20,000 is tapered: relief tapers from 100% to 25% for properties with rateable values between £12,001 to £15,000; and from 25% to 0% for properties with rateable values between £15,001 to £20,000. Cumulative rules remain in place including the £35,000 cumulative rateable value threshold. Car parks, car spaces, advertisements and betting shops are excluded from eligibility for SBBS from 1 April 2023.
Small Business Transitional Relief means for those losing or seeing a reduction in reliefs, the maximum increase in the rates liability relative to 31 March 2023 will be capped at £600 in 2023‑24, rising to £1,200 in 2024‑25 and £1,800 in 2025‑26.
1 April 2023: Business rates in Northern Ireland
The non-domestic rate has been frozen at 2021-22 levels.
The Small Business Rate Relief (SBRR) scheme has been extended for 2023-24.
1 April 2023: Increase to Plastic Packaging Tax
The charge for the Plastic Packaging Tax increased from £200 per tonne to £210.82 per tonne.
The tax applies if you:
expect to import into the UK or manufacture in the UK 10 tonnes or more of finished plastic packaging components in the next 30 days.
have imported into the UK or manufactured in the UK 10 tonnes or more of finished plastic packaging components in the last 12 months.
2 April 2023: Statutory parental leave increases
Statutory maternity, adoption, paternity, shared parental, adoption and parental bereavement pay increased to £172.48 per week (up from £156.66).
2 April 2023: Statutory sick pay increase
Statutory sick pay increased to £109.40 per week (up from £99.35).
6 April: Reduction in dividend allowance
The tax-free allowance for dividend income reduced from £2,000 to £1,000 from 6 April 2023 and then to £500 from 6 April 2024.
6 April 2023: Seed Enterprise Investment Scheme
The limits in the Seed Enterprise Investment Scheme, which encourages investors to back start-ups by providing tax relief, increased as follows:
The ceiling that applies to the investment a company can raise in the relevant period and on which investors can claim relief - from £150,000 to £250,000.
The limit that applies at the date of investment on the "gross assets" a company can have - from £200,000 to £350,000.
The age limit that applies to the definition of a company's "new qualifying trade" at the date of investment - from two years to three years.
The annual limits that apply to the investment amount on which individuals can claim income tax and CGT re-investment reliefs - from £100,000 to £200,000.
1 August 2023: Alcohol duty changes
As first announced in the government's March 2023 Budget, changes to alcohol duty have been introduced.
A freeze on alcohol duty has been in place since 2020, but duties have now been increased by 10.1% alongside an overhaul of the system.
Tax is now imposed according to the strength of a drink. A lower rate applies to drinks with alcohol by volume (ABV) below 3.5% , while the tax on drinks with ABV over 8.5% stays the same.
It means the duty on products like vodka, still wine, sherry and port has increased, although the duty on sparkling wine has fallen because it previously had higher duty than still wine.
There are two reliefs. One is a 11p cut in the duty for draught pints of beer. The government said it will benefit 38,000 pubs and bars.
The second is a reformed and extended Small Producer Relief which provides a lower rate of duty on all alcoholic products with ABV below 8.5%.
Transitional arrangements for producers and importers of some wine products are in place until 1 February 2025. This allows businesses to use an 'assumed strength' of 12.5% ABV, when working out the duty for wines with an ABV between 11.5% and 14.5% ABV.
The Wine and Spirit Trade Association (WSTA) provided the following table that outlines the duty changes:
8 August 2023: Extra information required for research and development (R&D) tax relief claims
Businesses or their R&D advisers making a claim for R&D tax relief have to provide additional information. The change is designed to allow HM Revenue & Customs (HMRC) to quickly assess the validity of a claim and work out the level of expertise involved in preparing it.
The following information needs to be provided:
Unique Taxpayer Reference (UTR). It must match the one shown in your company tax return
employer PAYE reference number
VAT registration number
business type. For example, your current SIC (Standard Industrial Classification) code
The contact details of:
the main senior internal R&D contact in the company who is responsible for the R&D claim, for example a company director
any agent involved in the R&D claim
Accounting period start and end date
The accounting period start and end date for which you'Re claiming the tax relief. This must match the one shown in your company tax return.
Qualifying expenditure details
Include details of the qualifying expenditure.
If you meet the conditions, you can claim for either or both:
tax relief as a small and medium-sized enterprise (SME)
expenditure credit as a large company or SME
1 October 2023: Ban on single-use plastics in England
A range of single-use plastics, such as cutlery, will be banned in England from 1 October 2023.
'Single use' means the item is meant to be used only once for its original purpose.
It is estimated that 2.7 billion items of single use cutlery and 721 million single use plates are used in England each year. Only 10% of these items are recycled.
The ban includes:
online and over-the-counter sales and supply
items from new and existing stock
all types of single-use plastic, including biodegradable, compostable and recycled
items wholly or partly made from plastic, including coating or lining
You can still supply single-use plastic plates, bowls and trays if either of the following apply:
you are supplying them to another business
the items are packaging (pre-filled or filled at the point of sale)
a pre-filled salad bowl or ready meal packaged in a tray
a plate filled at the counter of a takeaway
a tray used to deliver food
You can still supply food or drink in polystyrene containers if it needs further preparation before it is consumed. Examples include:
Supply of single-use plastic cutlery and balloon sticks will be completely banned with no exemptions.
Steps businesses can take to replace single use plastic
Swap plastic for bamboo or wooden cutlery for takeaway food
Swap plastic for metal cutlery for inhouse guests
Swap single use plastic plates or bowls to re-usable alternatives that can be washed.
Offer paper plates instead of plastic.
Offer to refill customers' water bottles or travel cups.
Encourage customers to bring their own clean containers for takeaway food.
Fines and inspections:
If you continue to supply banned single-use plastics after 1 October, you could be fined.
Inspectors from local authorities can visit premises to check that the rules are being followed. They may make test purchases, speak to staff and ask to see records
Inspectors can order a business to cover the cost of the investigation if it breaks the law.
Complaints about a business breaking the law can be made to Trading Standards.
1 October 2023: New labelling requirements for certain products moving from Great Britain to retail premises in Northern Ireland
From 1 October 2023, businesses in Great Britain (England, Scotland and Wales) can move prepacked retail goods and certain loose goods including fruit and vegetables through the “green lane” to Northern Ireland, under the Windsor Framework. This is the Northern Ireland Retail Movement Scheme.
Businesses must comply with new labelling requirements for moving goods through the green lane, to ensure that they are not moved onwards into the EU.
Some food products will need individual product labels with the words ‘Not for EU’. These requirements are being introduced in three stages from October 2023 to July 2025.
From 1 October 2023, individual labels will be required on all prepacked meat, prepacked meat products, meat packed on sales premises and some dairy products.
The government will provide grants to businesses to help with the cost of the first phase of the new labelling requirements. The funding will open to applications between January and March 2024.
To benefit from the funding, businesses should keep all evidence of costs to meet the new labelling requirements on 1 October 2023.
30 October 2023: Single-use plastic ban in Wales
Single-use plastic products are being banned in Wales in two phases.
From 30 October 2023, the ban includes:
Single-use plastic plates including paper plates with a laminated plastic surface.
Single-use plastic cutlery such as forks, spoons and knives.
Single-use plastic drinks stirrers.
Cups made of expanded or foamed extruded polystyrene.
Takeaway food containers made of expanded or foamed extruded polystyrene.
Single-use plastic balloon sticks.
Single-use plastic-stemmed cotton buds.
Single-use plastic drinking straws – with exemptions so people who need them to eat and drink safely and independently can continue to have them.
There are some exemptions such as single-use straws can still be provided to people who needs them for health, medical, disability or social care reasons.
Phase two of the ban of single-use plastic products will be introduced by Spring 2026 and includes:
Carrier bags – with exemptions including carrier bags for raw fish, meat or poultry and unpackaged food
Polystyrene lids for cups and takeaway food containers
Oxo-degradable plastic products
31 December 2023: Closure of Northern Ireland Trader Support Service
The Northern Ireland Trader Support Service (TSS) was set up to help traders meet their administrative obligations under the Northern Ireland Protocol following Brexit.
The service was originally due to close on 31 December 2022 but the government has extended it until 31 December 2023.
Closure of Customs Handling of Import and Export Freight (CHIEF) system
The government originally announced that CHIEF, which is used to identify goods for border checks, will close to export declarations on 30 November 2023, and be replaced by HMRC's Customs Declaration Service (CDS).
This plan has now been adjusted. "Selected high-volume" exporters still need to switch by 30 November, with all other businesses having to move to CDS for exports by 30 March 2024.