Spring Budget – March 2023
On 15th March 2023, Chancellor Jeremy Hunt unveiled his Budget to Parliament. He stated that whilst the IMF (International Monetary Fund) have indicated that the UK economy is on the right track, the government will remain vigilant and won’t hesitate to take any steps necessary for economic stability.
Inflation is currently at 10.1% – the target is 2%. However, the inflation rate is predicted to have fallen to 2.9% by the end of 2023.
Hunt stated that whilst the Autumn budget tackled stability, today’s Spring budget concentrates on growth, one of the government’s top 5 priorities. Mr Hunt confirmed the following changes:
Corporation Tax
It was confirmed that the corporate tax rate will increase from 19% to 25% from April 2023 for those making a profit of more than £250k. Companies with profits between £50,000 and £250,000 will pay a marginal rate between 19% and 25% and those with profits less than £50,000 will pay 19%.
Capital Allowances – Full Expensing
A new policy for the next 3 years will be introduced so that every single pound a company invests in IT equipment and certain plant or machinery can be deducted straight away, in full, from taxable profits.
The 50% First Year Allowance for special rate assets will also be extended for a further 3 years to 31 March 2026.
R&D Scheme – Enhanced Credit
The Chancellor announced a new scheme from April 2023 for small or medium-sized businesses who will be able to claim a credit worth £27 for every £100 they spend if they spend 40% or more of their total expenditure on Research and Development.
Pensions
The pensions annual tax-free savings allowance will increase from £40k to £60k from April 2023. The lifetime allowance (LTA), which is currently £1,073,100, places a cap on the amount an individual can accumulate in pensions savings over their lifetime – this will be abolished. Nobody will face a LTA charge from April 2023.
The minimum tapered Annual Allowance will also be increased from £4k to £10k from April 2023 with ‘adjusted income’ levels required for tapering to apply increased from £240k to £260k
Duty rates – Alcohol and Fuel
The planned rise in fuel duty from April will no longer go ahead. Fuel Duty will therefore remain frozen for a further 12 months. The average driver will save around £100 next year.
From 1 August 2023 the duty on draught products in pubs will be up to 11p lower than in supermarkets. This will be maintained as part of a new Brexit pubs guarantee.
Energy Crisis
Mr Hunt stated that there is still enormous pressure on families and so the Energy Price Cap will remain at £2.5k for a typical household over the next 3 months. This should save the average family a further £160.
Due to rising energy costs, there is a risk to community facilities, particularly swimming pools, and so it was announced that a £63m fund would be introduced to to keep public leisure centres and pools afloat.
Childcare System Reform
Where all adults in a household are working 16 hours a week, every single child over 9 months will qualify for 30 hours of free weekly childcare. This will be introduced in stages starting with 2-year-olds being entitled to 15 hours from April 2024 and all children over 9 months of age from Sept 2024. From September 2025 the 15 hours will be increased to 30 hrs.
A £600 incentive payment will be given to anyone joining the Childminding profession or £1,200 if they join through an agency. Funding to nurseries that provide free childcare will be increased to £204m from September and £228m the following year.
Hunt stated that a third of schools do not offer childcare before and after school (8am – 6pm) and so the government will fund more schools to increase supply of wraparound care, helping parents to work.
Employment
The Chancellor wants to remove the barriers that stop those who want to work. For those who are disabled, the benefits entitlement will now be separate from an individual’s ability to work meaning that individuals will not have to worry about losing benefits if they gain employment.
Apprenticeships (to be known as ‘Returnerships’) will be introduced so those over 50 years of age can return to employment should they wish.
Universal credit
Parents on Universal Credit moving into employment or increasing their hours will now receive up to £951 for one child and £1,630 for two children per month, paid upfront.
The Chancellor ended his statement stating that we are building for the future and that “we are following the plan and the plan is working!”
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