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Spring Budget 2023

Chancellor, Jeremy Hunt, delivered what he termed as a “Budget for Growth”, which is “long term & sustainable”. The first headline statement was that the International Monetary Fund confirmed that the UK will not enter a technical recession this year. Furthermore, the Office of Business Responsibility report that inflation will fall from 10.7% to 2.9% by the end of 2023, which will be welcome news by all.

For our business clients, no change to proposed new Corporation Tax Rates from 1 April 2023. However, “full capital expenses” on main rate plant and machinery was Mr Hunt’s attempt to replace the super-deduction on a more permanent basis, which will be introduced from 1 April 2023, and potentially provide a huge boost for investment. With further incentives for high tech and life science businesses, the business community may well see positives in today’s budget.

For investors, and specifically the over 50’s, the increase in the pensions annual allowance from £40k to £60k will be welcomed. The proposed abolition of the pension lifetime allowance was a surprise but may well give a huge impetus to those looking to save from 6 April 2023.

With the extension to the childcare system, this budget was perhaps the first shot fired before the next general election. Head of EQ Taxation, David Morrison commented, “Today’s Budget was upbeat and offered incentives for businesses, families, and older employees. If all else fails, we can all head to the pub and enjoy a draught beer under the ‘Brexit Pub Guarantee’.”

You can download our Spring Budget Summary for our full analysis on the announcements made and what they mean for you here. The main points were as follows:

  • The OBR has forecast inflation will fall to 2.9% by the end of 2023
  • The Energy Price Guarantee will remain at £2,500 a year for a typical household until the end of June
  • Pre-payment meters should not pay more for their energy than comparable customers who pay by direct debit
  • Duty on average strength draught beer sold in pubs across the UK will be frozen from 1st August, making it up to 11p cheaper than in supermarkets
  • Planned increase on Fuel duty to be cancelled, freeze extended for 12 months.
  • New policy of full capital expensing for companies for next 3 years being introduced meaning IT equipment, plant & machinery can be deducted from taxable profits in full, coming into force from 1 April 2023
  • From 1 April 2023 Annual Investment Allowance is permanently set at £1 million, available to most businesses, including unincorporated and most partnerships
  • Enhanced R&D Tax Credits for loss making SMEs. If a qualifying SME spends 40% or more of their total expenditure on R&D, they’ll be able to claim a credit worth £27 for every £100 spent
  • Tax relief for theatres, orchestras, and museums & galleries will stay at rates of 45%-50% until 2025
  • Qualifying care givers will see their tax free allowance rise from £10,000 to £18,140 from 6 April 2023
  • Pensions lifetime allowance is abolished and the annual allowance for pensions savings to increase from £40,000 to £60,000 from April 2023
  • 30 hours free childcare in England for children over the age of nine months up to 3 years, alongside boosts to subsidised childcare for parents on Universal Credit including upfront support

As always, our EQ Taxperts are on hand to offer support and advice so please get in touch to discuss any of the annoucements by calling one of our offices or email [email protected].

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