Spring Statment

Chancellor’s Spring Budget Statement 2023

Spring Budget, set out to meet the Government’s economic targets and to deliver against the four pillars of growth:

Enterprise, Education, Employment and Everywhere.

The Chancellor, The Rt Hon Jeremy Hunt MP, in yesterday’s Spring Budget, set out to meet the Government’s economic targets and to deliver against his four pillars of growth: Enterprise, Education, Employment and Everywhere.

The Spring Budget was delivered in the context of improved economic data, which gave the Chancellor more scope to support individuals and businesses than may have been expected.

Below is a summary of the most important announcements:-

  • With a stated objective of encouraging parents back to the workforce, 30 hours of free childcare (which already exists for eligible working parents of three and four year old children) will now also be phased in for children aged nine months up to three years in England. Upfront support for childcare costs to a maximum of £1,630 for two children will be provided to parents on Universal Credit and starting work or increasing their hours.
  • From 6 April 2023, the Annual Allowance (an annual tax-free pension contributions cap) will increase from £40,000 to £60,000; the Money Purchase Annual Allowance and the minimum Tapered Annual Allowance (TAA) will both be increased from £4,000 to £10,000, while the adjusted income threshold for the TAA will also be increased from £240,000 to £260,000; and the Lifetime Allowance charge will be removed (the Lifetime Allowance will be abolished from April 2024). The Government has said this measure is intended to keep doctors and other highly skilled people in the workforce.
  • The Energy Price Guarantee at £2,500 per annum will be extended for a further three months to the end of June 2023 and measures will be introduced to bring energy prices paid by users of pre-payment meters in line with those who pay by comparable direct debit. However, the energy rebate scheme will end.
  • Fuel duty will remain frozen and the 5p/litre temporary reduction has been extended for a further 12 months.
  • However, the freezing of income tax thresholds will mean personal tax increases from next month.
  • The scheduled corporation tax main rate increase to 25% on 1 April 2023 will go ahead, applying to businesses with profits over £250k. Marginal relief will be available to those with profits between £50k and £250k and the 19% rate will continue to apply to businesses with profits of less than £50k.
  • The 130% super-deduction for capital expenditure will not be extended but capital investment on IT and plant and machinery will be incentivised through the introduction of a full capital expensing policy for the next three years (the intention is to make this permanent). This measure is expected to cost the Treasury £9 billion per annum and increase the competitiveness of the UK capital allowances regime.
  • The Chancellor responded to calls for the planned cuts to R&D support for SMEs to be mitigated and a package of support worth £500m per annum was announced to help 20,000 R&D intensive businesses.
  • Various reforms were announced with the intention of increasing workforce participation and providing opportunity to study, retrain and upskill flexibly. In addition to the childcare measures, the reforms will focus on supporting people with disabilities, long-term sickness, carers, the longer-term unemployed and the over 50s into work.
  • The VAT exemption on healthcare will be extended from 1 May 2023 to include medical services carried out by staff directly supervised by registered pharmacists. The zero rate on prescriptions will be extended to medicines supplied through Patient Group Directions (in line with doctors’ prescriptions).
  • In an effort to increase resilience to future energy price shocks, the government is supporting investment in the energy system by launching Great British Nuclear to support new nuclear builds. Nuclear energy will be classed as environmentally sustainable.
  • Funding of £20 billion has been announced for investment in carbon capture technology over the next 20 years.
  • The government is considering new criminal offences for promoters of tax avoidance schemes who fail to comply with a legal notice from HMRC to stop promoting a scheme.

Please be assured, once again, that we are only a phone call away, and please get in touch if we can be of any assistance.

Please remember to visit our website www.fc-accountants.co.uk for regular up-dates and features.

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