Spring Budget 2023
Summary
On March 15th, Chancellor Jeremy Hunt took the stand in Parliament to present his 2023 Spring Statement. His remarks updated and improved the policies in his Emergency Budget from last year, focusing on addressing the needs of the British public in these turbulent times. This includes combating the rising cost of living, tackling healthcare and energy issues, and providing more excellent stability in the political and economic landscape. Here is a summary of the main announcements:
Business and trade
- The corporation tax rate businesses pay on taxable profits over £250,000 has been raised to 25%, up from the previous rate of 19%.
- Companies earning between £50,000 and £250,000 in profits must pay taxes from 19% to 25%.
- Businesses may be eligible for a tax break on the cost of equipment and other investments used to update and expand their operations.
- The UK will receive an £80m investment over the next five years, providing tax incentives and other benefits for the twelve newly created Investment Zones.
- International traders will now be able to reduce their paperwork, as new regulations give them a more extended period to submit the required customs documents.
Economy
- According to the Office for Budget Responsibility, Britain will likely avoid a recession in 2023. However, the nation’s economy will experience a slight decline of 0.2%.
- Predictions show that growth of 1.8% will be seen in the coming year, with a further increase of 2.5% in 2025 and 2.1% by 2026.
- It is forecasted that the UK’s inflation rate will drop to 2.9% by the end of this year, compared to the 10.7% recorded in the final quarter of 2022.
- It is anticipated that debt will constitute 92.4% of the Gross Domestic Product this year, and in 2024, that number is expected to reach 93.7%.
Wages and Taxation
- The government has frozen fuel duty, extending the 5p cut to petrol and diesel, originally scheduled to end in April, for an additional year.
- The annual allowance for a tax-free pension pot, which had been static for nearly a decade, will now increase from £40,000 to £60,000.
- The limit on the total pension savings that workers can accrue over their lifetime before paying additional taxes will be eliminated, with the current maximum set at £1.07m.
- Tobacco taxes rise above inflation by 2%, while hand-rolling tobacco taxes are set to increase by 6%.
- Starting in August, alcoholic beverage taxes will increase following inflation. Additionally, reliefs will be provided to pubs selling beer, cider, and wine.
Jobs
- In England, the number of free childcare hours available for working parents is being increased to cover infants aged one and two, with the change taking effect in stages from April 2024.
- The UK government has allocated £63 million to implement programmes that encourage individuals over 50 to return to work.
- A new initiative for disabled individuals in England and Wales, called Universal Support, has been implemented as a voluntary job program.
- Universal Credit families can now receive advance childcare support instead of waiting for it to be reimbursed, and the £646-a-month-per-child limit has been increased to £951.
- To reduce labour deficits, the government has decided to loosen the regulations on immigration for five specific job titles in the construction industry.
- An incentive of £600 has been proposed for individuals who choose to become childminders, and specific regulations have been amended in England to allow childminders to look after a more significant number of children.
Energy
- For the next three months, the government has implemented a subsidy that will limit the average household’s annual energy costs to £2,500 until the end of June.
- The British government has set aside £200 million to balance the costs of energy charges between households who use pre-payment meters and those who pay via direct debit. This initiative is estimated to benefit around four million homes.
- For nuclear energy to be eligible for environmental sustainability investments, increased public funding has been promised.
- Over the next two decades, there is a commitment of £20bn towards low-carbon energy projects, primarily centred around carbon capture and storage.
If you have any questions about the spring budget for 2023 and how this will affect your business, please get in touch with us. We are happy to have a chat to support you.
