Jeremy Hunt delivered his first Spring Budget 2023 as Chancellor at 12.30pm today.
In his statement, the Chancellor stated that the Office for Budget Responsibility have declared that the UK will not now enter ‘technical recession’ this year as was forecasted and his speech was centered around his so called ‘four pillars of strategy’ to half inflation, reduce debt and grow the economy. Enterprise, Employment, Education and Everywhere!
The key points announced in the Budget speech are set out below:
UPDATE – You can download a detailed summary of the Spring Budge below:
Pensions and Duties
- The lifetime allowance, which is a cap on the amount workers can accumulate in pensions savings over their lifetime before having to pay extra tax (currently £1.07m) is to be abolished from April 2024.
- The annual allowance, which is the most you can save in your pension pots in a tax year before you have to pay tax is to rise from £40,000 to £60,000 from April 2023 – 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.
- From August 2023, alcohol taxes in pubs to be 11p in the pound lower than the rate in supermarkets.
- Government subsidies limiting typical household energy bills to £2,500 a year extended for three months until the end of June 2023.
- £200m fund announced to bring energy charges for prepayment meters into line with prices for customers paying by direct debit – affects 4m households – saving an average of £45 a year.
- Commitment to invest £20bn over next two decades on low-carbon energy projects, with a focus on carbon capture usage and storage.
- Nuclear energy to be classed as environmentally sustainable for investment purposes, with promise of more public funding and investment incentives.
- £63m to help leisure centres across England with rising swimming pool heating costs and invest to become more energy efficient.
Jobs and Work
- New fitness-to-work testing regime to qualify for health-related benefits.
- Funding for up to 50,000 places on new voluntary employment scheme for disabled people to help remove barriers to employment, called Universal Support.
- Tougher requirements to look for work and increased job support for lead child carers on universal credit.
- Introduction of “Returnerships” skills boot camps to encourage over-50s who have left their jobs to return to the workplace.
- To delivery 30 hours a week of free childcare for eligible working parents of children age 9 months up to 3 years in England by 2027/2028. Eligible households where all adults are working at least 16 hours per week and the free childcare will be available in stages as follows:
From April 2024 – 15 hours free per week – children less than 2 years old
From September 2024 – 15 hours free per week – children aged 9 months and over
From September 2025 – 30 hours free per week – children aged 5 and under
Economy and public finances
- Office for Budget Responsibility predicts the UK will avoid recession in 2023.
- Size of the economy predicted to shrink by 0.2% this year, before growing by 1.8% next year, 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 next year, rising to 93.7% in 2024-25.
Business and Trade
- Main rate of corporation tax, paid by businesses on taxable profits over £250,000, confirmed to increase from 19% to 25%.
- Companies with profits between £50,000 and £250,000 to pay between 19% and 25%
- From 1 April 2023 to 31 March 2026, Companies able to deduct 100% of investment in new machinery and technology to lower their taxable profits. (100% first year allowance on main rate assets).
- 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.
- From 1 April 2023, an increased rate of relief for loss making Research and Development intensive Small and Medium size Enterprises. Eligible companies will receive £27 from HM Revenue & Customs for every £100 of Research and Development investment.
- Potholes fund increased from £500m to £700m to improve local roads.
- Commitment to raise defence spending by £11bn over the next five years.
- Prison sentences for those convicted of marketing tax avoidance schemes.
- An extra £20m over next two years for charities helping to prevent suicide.
- Streamlined approvals process promised for new medical products.
- £900m for new super computer facility, to help UK’s AI industry.