Chancellor Jeremy Hunt’s Spring Budget 2023: A Focus on Growth

Chancellor Jeremy Hunt announced his Spring Budget 2023 in the House of Commons on the 15^th March. The budget aimed to encourage those who have left their jobs to return to work and promote business investment. The Budget also includes measures related to fuel, alcohol, pensions, wages, energy bills, childcare, universal credit, and economic growth. How will the Spring Budget 2023 affect you, read the highlights to find out.

Fuel, alcohol, pensions and wages

• Cap on amount workers can accumulate in pensions savings over their lifetime before having to pay extra tax (currently £1.07m) to be abolished
• Tax-free yearly allowance for pension pot to rise from £40,000 to £60,000 – having been frozen for nine years
• Fuel duty frozen – the 5p cut to fuel duty on petrol and diesel, due to end in April, kept for another year
• Alcohol taxes to rise in line with inflation from August, with new reliefs for beer, cider and wine sold in pubs
• Tax on tobacco to increase by 2% above inflation, and 6% above inflation for hand-rolling tobacco

Energy bills, prepayment meter and nuclear power

• Government subsidies limiting typical household energy bills to £2,500 a year extended for three months, until the end of June
• £200m to bring energy charges for prepayment meters into line with prices for customers paying by direct debit – affects 4m households
• Commitment to invest £20bn over next two decades on low-carbon energy projects, with a focus on carbon capture and storage
• Nuclear energy to be classed as environmentally sustainable for investment purposes, with promise of more public funding
• £63m to help leisure centres with rising swimming pool heating costs, and invest to become more energy efficient

Childcare, universal credit and back to work plans

• 30 hours of free childcare for working parents in England expanded to cover one and two-year-olds, to be rolled out in stages from April 2024.
  • The phasing will work as follows:
    • From April 2024, working parents of 2 year-olds will be able to access 15 hours of free childcare.
    • From September 2024, working parents of 9 month to 2 year-olds will be able to access 15 hours of free childcare.
    • From September 2025, working parents of 9 month to 2 year-olds will be able to access 30 hours of free childcare.
• Families on universal credit to receive childcare support up front instead of in arrears, with the £646-a-month per child cap raised to £951
• £600 “incentive payments” for those becoming childminders, and relaxed rules in England to let childminders look after more children
• New fitness-to-work testing regime to qualify for health-related benefits
• New voluntary employment scheme for disabled people in England and Wales, called Universal Support
• Tougher requirements to look for work and increased job support for lead child carers on universal credit
• £63m for programmes to encourage retirees over 50 back to work, “returnerships” and skills boot camps
• Immigration rules to be relaxed for five roles in construction sector, to ease labour shortages

Government debt, inflation and economic growth

• Office for Budget Responsibility predicts the UK will avoid recession in 2023, but the economy will shrink by 0.2%
• Growth of 1.8% predicted for next year, with 2.5% in 2025 and 2.1% in 2026
• UK’s inflation rate predicted to fall to 2.9% by the end of this year, down from 10.7% in the last three months of 2022
• Underlying debt forecast to be 92.4% of GDP this year, rising to 93.7% in 2024

Corporation tax, Investment Zones and tax breaks

• Main rate of corporation tax, paid by businesses on taxable profits over £250,000, confirmed to increase to 25%. Small companies (less than £50,000) will still pay 19%. Companies with profits between £50,000 and £250,000 will pay tax at the main rate reduced by a marginal relief providing a gradual increase in the effective corporation tax rate
• Companies able to deduct investment in new machinery and technology to lower their taxable profits
• Tax breaks and other benefits for 12 new Investment Zones across the UK, funded by £80m each over the next five years
• Reduced paperwork for international traders, who will also be given longer to submit customs forms under streamlined rules

Other measures in the Spring Budget 2023

• Commitment to raise defence spending by £11bn over the next five years
• Prison sentences for those convicted of marketing tax avoidance schemes
• £200m this year to help local councils in England repair potholes
• An extra £10m over next two years for charities in England helping to prevent suicide
• Streamlined approvals process promised for new medical products
• £900m for new super computer facility, to help UK’s AI industry

For further advice on any of the points raised in the  Spring Budget 2023, please get in touch on 01233 512012

Source: BBC News