Spring Budget 2023

With the official start of Spring less than a week away, Chancellor Jeremy Hunt delivered his Spring Budget. A “budget for growth”. Claiming that the plan is working, that the UK economy is on the right track and will not enter a recession this year.

Here are our key learnings from the Chancellor’s announcement:

Highlights affecting individuals

Pension Savings

Currently, there are limits placed on the total tax-relieved pension savings an individual can make each year and over their lifetime.

To stop these limits from acting as a barrier to remaining in work, the government will remove the Lifetime Allowance charge from 6 April 2023, before completely abolishing it in a future Finance Bill.

There will also be an increase to the Annual Allowance from £40,000 to £60,000 starting in April 2023. Individuals will continue to be able to carry forward unused Annual Allowances from the three previous tax years.

The government will increase the Money Purchase Annual Allowance from £4,000 to £10,000 and the minimum Tapered Annual Allowance from £4,000 to £10,000 from 6 April 2023. The adjusted income threshold for the Tapered Annual Allowance will also be increased from £240,000 to £260,000 from 6 April 2023.

Energy and fuel prices

The government’s Energy Price Guarantee will not rise by 20% in April as originally planned. The typical household bill is to be held at the £2,500 cap for the next three months. Though bills are likely to rise as the separate £400 energy bill support ends this month.

The cut to duty on petrol and diesel of 5p a litre has been extended for another 12 months. In addition, the underlying duty itself has also been frozen. The government says this will save the average driver £100 over the next year.  

Amending the Self Assessment forms for crypto assets 

Changes will be introduced to the Self Assessment tax return forms requiring amounts in respect of crypto assets to be identified separately. The changes will be introduced on the forms for tax year 2024-25.

Childcare

In order to close the gap between parental leave finishing and the current free childcare offer. The chancellor announced the provision of 30 hours of free childcare a week to parents of children aged between nine months and two years old.

This will be phased in until every eligible working parent of under five-year-olds receive this support by September 2025.

If you run a nursery, the government will increase the hourly rate it pays providers from September 2023.

New childminders will get incentive payments for joining the sector: £600 for new joiners, and £1,200 for those joining through an agency with the aim of boosting this provision.

Potholes

There will be a £200m increase in funding to help local communities to tackle the problem. Hurrah.

Measures affecting Businesses

Corporation Tax

The Chancellor confirmed that the main corporation tax rate will, as previously announced, increase from 19% to 25% with effect from 1 April 2023. See our separate summary of the changes in our earlier blog post.

Capital Allowances

Capital allowances allow businesses to write off the cost of qualifying expenditure against taxable income, thus cutting the overall tax bill.

As expected, the super-deduction scheme giving 130% capital allowance for qualifying expenditure will end on 31 March 2023.

From 1 April 2023 this will be replaced with “full expensing” – 100% capital allowances for qualifying plant and machinery and this will remain in place until 31 March 2026.

50% first year allowances for special rate plant and machinery, including long life assets will also be introduced.

Tax Relief for the Creative Sector

The government will continue to support the UK’s world-leading creative industries by reforming the audio-visual tax reliefs into expenditure credits with a higher rate of relief than under the current system.

Research & Development

From 1 April 2023, a higher rate of relief for loss-making R&D intensive SMEs will be introduced. SME companies for which qualifying R&D expenditure constitutes at least 40% of total expenditure will be able to claim a higher payable credit rate of 14.5% for qualifying R&D expenditure.

 Source: HM Treasury 15-03-2023

If you have any queries regarding the announcement and how you may be affected or are looking for more clarity on your business financials, now is the perfect time to get in touch

‍This summary is to serve as a guide, it does not cover the entire Spring Budget (which can be found on the Government website) and it should not be taken as professional advice.