From increasing the corporate tax rate to abolishing the lifetime allowance, Jeremy Hunt has unveiled a series of measures in his first Spring Budget since becoming chancellor, with the aim of “supercharging growth” across the country.
Delivering his Spring Budget 2023 against a backdrop of rocketing inflation, mass industrial action and a cost of living crisis, the chancellor reported that the UK will avoid recession in 2023, according to predictions made by the OBR.
Encouragingly, the UK’s inflation rate is predicted to fall to 2.9% by the end of this year, down from 10.7% in the last three months of 2022.
Here, Clayton & Brewill has provided a round-up of key business, personal, cost of living and energy measures. As always, if you have any queries about any measures announced, please do get in touch and we’d be happy to advise.
- Corporation tax rate increase – the main rate of corporation tax, paid by businesses on taxable profits over £250,000, has been confirmed to increase from 19% to 25% starting next month.
- Plant & machinery investments – From April 2023 until the end of March 2026, companies can claim 100% capital allowances on qualifying plant and machinery investments. Under full expensing, for every pound a company invests, their taxes are cut by up to 25p.
- R&D support – the chancellor is introducing additional tax support to help research & development intensive SMEs. For every £100 spent on R&D, eligible companies will be able to claim £27 back.
- Investment zones – also announced was the creation of 12 new investment zones (including one in the East Midlands) to “drive business investment and level up” the country. Each zone will have access to interventions worth £80m over five years, including tax reliefs and grant funding.
- 30 hours of free childcare – this will be available for all under-fives for eligible households, where all adults are working at least 16 hours. This will be introduced in stages, starting in April next year.
- Lifetime allowance (LTA) abolished – the total amount that workers can accumulate in their pension savings before paying extra tax, was previously frozen at £1,073,100 till April 2026. Jeremy Hunt has now abolished this cap in a bid to encourage over 50s back to work.
- Annual allowance increased – the tax-free yearly allowance for pension pots is to rise from £40,000 to £60,000, having been frozen for the last nine years.
- Fuel duty frozen – the 5p reduction to fuel duty on petrol and diesel introduced in March last year will be retained for another 12 months.
- Brexit pubs guarantee – From August, tax on draught beer will remain frozen, while alcohol taxes in pubs is to be 11p in the pound lower than the rate in supermarkets. This also extends to every pub in Northern Ireland.
- Universal Support – Funding for up to 50,000 places on new voluntary employment scheme for disabled people, called Universal Support. The government will spend up to £4,000 per person to find them a suitable role and cater to their needs.
- ‘Returnerships’ – new apprenticeship aiming to provide the over 50s with the skills and support they need to find a recognisable path back into work.
Cost of living / energy measures
- Energy Price Guarantee (EPG) – this will be kept at £2,500 for an additional three months from April to June. Households on prepayment meters will also have their charges brought “in line with comparable direct debit charges.”
- Low carbon energy projects – the chancellor committed to invest £20bn over next two decades on low-carbon energy projects, with a focus on carbon capture and storage.
- Nuclear energy – subject to consultation, nuclear power will be classed as environmentally sustainable with a promise of more public funding.
- Leisure facilities – Leisure centres with swimming pools have been given a £63m boost to help ease the pressure caused by rising energy and maintenance costs and to help facilities become low-carbon and more energy efficient.
- Support for Ukrainians – an £11m support programme has been announced to provide employment support for up to 10,000 Ukrainians in the UK.
- Defence spending – The government has committed to raise defence spending by £11bn over the next five years.
- Tax avoidance marketing – Promotors of tax avoidance who fail to stop their activities once ordered to do so by HMRC could now face criminal prosecution.
- Charities – As part of the governments support package for charities, an extra £20m will be invested over next two years in organisations helping to prevent suicide
- MHRA – The chancellor promised a streamlined approvals process for new medical products.
- AI – £900m will be invested in a new supercomputer facility, to help the UK’s AI industry
- Theatres, orchestras and museums & galleries – tax relief for will stay at rates of 45%-50% until 2025.
- Funding for potholes – an extra £200m has been pledged to improve the road network.