How will the April Spring Budget changes impact travel businesses?

As a travel business, it’s important to prepare for the changes coming into effect on 1 April 2023, announced in last year’s Autumn Statement and this year’s Spring Budget. In these short TTC Insights Travelcast clips, TTC Directors Martin Alcock and Adam Pennyfather provide insights on what the changes are and how they could impact your business.

2 things for travel businesses to consider

1 – Assess the impact associated companies have on your taxable profits

From 1 April 2023, the corporation tax limits are changing. The higher limit increases to 25% for businesses with taxable profits of above £250,000. There is a lower limit of 19% for businesses with taxable profits below £50,000. Marginal relief will be available if you fall somewhere in the middle.

However, if you have associated companies for the purpose of corporation tax, these limits will be divided by the number of qualifying companies. For instance, with two associated companies, the lower limit becomes £16,667 and the upper limit £83,333 as the limits are divided by three. 

Travel businesses should review associated companies and consider the value they provide. For example, if a transport company operating under the TOMS scheme isn’t providing as much value since the UK left the EU, you may want to consider making it dormant. 

One other consideration is around the timing of corporation tax payments. Associated companies will also impact the threshold at which you are deemed a large company. This could result in you having to pay corporation tax in instalments which could impact your cash flow. 

2 – Investment in plant and machinery could provide relief

Travel businesses that are planning on investing in plant and machinery can now get 100% relief on their qualifying expenditure. Given the increase in tax rates from April 2023, if you are planning investment in applicable plant and machinery, this full expensing allowance could provide a good amount of relief.

You can find out more about this and whether you qualify on gov.uk.

Looking for even more detail on some of these changes? Check out these four ways the Autumn Statement impacts travel businesses.

If you would like help understanding how these changes could help your travel business, please get in touch.