Chancellor Jeremy Hunt announced the Spring Budget on 15th March 2023 (the “Budget”). Some of the measures announced by the Chancellor are summarised below:
UK ECONOMY:
- INFLATION: The rate of inflation is expected to fall to 2.9% by the end of 2023. It should be noted that the Government’s target for inflation is 2%.
- GROWTH: The UK is expected to avoid a recession in 2023. Notwithstanding this, the economy will shrink by 0.2%. Growth of 1.8% is expected for 2024, 2.5% in 2025 and 2.1% in 2026.
- DEBT: Underlying debt is expected to be 92.4% of GDP in 2023 and is expected to rise further to 93.7% in 2024.
BUSINESS AND BUSINESS TAXES:
- INVESTMENT ZONES: Benefits including tax breaks are expected for 12 new investment zones across the UK.
- CORPORATION TAX: Corporation Tax will rise from 19% to 25% for firms with taxable profits of over £250,000. Companies with profits of between £50,000 and £250,000 will pay between 19% and 25%.
ENERGY BILLS AND CHILDCARE::
- CHILDCARE: 30 hours of childcare is to be brought in from April 2024 in stages which will cover working parents with 1 to 2 year olds. However, conditions will apply to this. Incentive payments of £600 for persons becoming childminders.
- WORK FOR OVER 50s: An amount of £63m for programmes to encourage retired persons over 50 back to work.
- ENERGY BILLS: Limits on household energy bills of £2,500 per annum will continue in place until the end of June 2023. In addition, £200million has been allocated to allow for energy changes to prepayment meters such that these customers are in line with customers who pay via direct debit. The Energy Bills Discount Scheme will supersede the Energy Bills Relief Scheme until 31 March 2024.
PENSIONS, PERSONAL TAX & THE COST OF LIVING:
- PENSIONS: The maximum total that workers can contribute to pensions during their lifetimes before paying tax, currently standing at £1,070,000, is to be removed. The annual tax free allowance for contribution to pensions, currently standing at £40,000, is to increase to £60,000.
- ALCOHOL: Alcohol taxes will increase in line with inflation from August 2023. Notwithstanding this, there will be new tax reliefs for beer, wine and cider that is sold in pubs.
- FUEL: The cut to fuel and petrol duty will be extended for another year. This cut is a 5% cut.
- TOBACCO: There will be an inflation + 2% rise on the tax on tobacco and for hand-rolled tobacco this will be an inflation + 6% rise.
Please note that this summary does not contain all the measures outlined in the Budget by the Chancellor. For further information and details of all measures, please refer to the policy paper for the Budget which is available via the following weblink:
Spring Budget 2023 (HTML) – GOV.UK (www.gov.uk)
Please note that this blog does not constitute accounting or tax advice. Should you require accounting advice, please do not hesitate to contact us.