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Chancellor Jeremy Hunt in his Spring Budget 2023 today said his raft of financial changes will make the UK “one of the most prosperous in the world” while also “harnessing British ingenuity to make us a science and tech superpower”.
Opening his Budget, Mr Hunt said the UK economy was proving the doubters wrong” and with “stability and sound money” Britain will avoid a technical recession this year.
Chancellor Jeremy Hunt’s budget is being called a “Back to work” budget, claiming it will stimulate economic growth.
Here are 10 key takeaways from today:
Abolition of pensions lifetime allowance
The chancellor has completely scrapped the lifetime tax allowance (LTA) in a surprise move and increased the annual allowance (AA) from £40,000 to £60,000.
The LTA was originally set at £1.5m when it was introduced in 2006; it gradually rose to £1.8m in 2010 but fell to just £1m in 2016. Since then the LTA has increased to £1,073,100.
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The AA was originally set at £215,000 in 2006, rising to £255,000 in the 2010/11 tax year before being cut back.
OBR forecasts inflation and living standards
The Office for Budget Responsibility published a fresh forecast, revealing that inflation is expected to drop sharply throughout the year, falling to 2.9% by the end of 2023.
However, living standards are also expected to fall at their greatest since records began, falling 6% cumulatively over the next two years.
A technical recession is projected to be avoided, as GDP is predicted to drop only 0.2% throughout this year, though GDP growth will be weaker than expected from 2025 onwards.
Back to work policies
The Chancellor revealed a range of policies to tackle the UK’s labour shortage, attempting to pull thousands of people back into the workforce. The measures included reforms to support disabled people, those with long-term health conditions, parents, the over 50s and people on Universal Credit to return to the workforce.
There will also be increased sanctions enforcement, along with changes to sickness benefits, disability support, doctor sick notes and funding for occupational health consultants.
Reforms for start-ups
The Chancellor, Jeremy Hunt teased major reforms to the financing system of start-ups that will be revealed in the Autumn Statement later this year. These would aim to push investment from pension funds and make the London Stock Exchange a more attractive place to list.
The chancellor also revealed two areas of policy reform in medicine and artificial intelligence, which received various reforms to boost investment and innovation in the sectors.
Nuclear and green energy
Nuclear energy will now be classed as environmentally sustainable, while the government will create a body to oversee new nuclear power stations across the UK, as well as launching a competition for the design of small modular reactors.
The government will also issue a further £10bn in green gilts, while £20bn has been pledged to support carbon capture projects.
Energy support extension
The government’s energy price guarantee has been extended for an additional three months, which will keep the energy cap at its current £2,500 level, rather than rise to £3,000 from April.
Hunt said energy bills were set to fall from July onwards and the temporary extension to the support scheme “will bridge the gap and ease the pressure on families, while also helping lower inflation too”.
Annual investment allowance increased
The annual investment allowance has been increased to £1m for small businesses.
This will now allow 99% of all businesses to deduct the full value of their investment from each year’s taxable profits.
‘Full expensing’ has also been introduced for the next three years, so all money invested in IT equipment by a small business can be deducted in full from taxable profits.
Jeremy Hunt also confirmed corporation tax will rise from 19% to 25% in April.
Tax changes to REITs
Real estate investment trusts will no longer by required to hold a minimum of three properties if it holds a single commercial property worth £20m or more.
The rules governing the deduction of tax from property income distributions paid to partnerships will also be amended to be paid partly gross and partly with tax deducted.
Tax avoidance crackdown
The government plans to consult on the introduction of a new criminal offence for promoters of tax avoidance who fail to comply with a legal notice from HM Revenue & Customs to stop promoting a tax avoidance scheme.
It also plans to double the maximum sentences for tax fraud for the most “egregious” forms of tax fraud to 14 years and consult on “expediting” the disqualification of directors of companies involved in promoting tax avoidance.
Free childcare provision
A total of 30 hours of free childcare were made available to one and two-year-olds, though this will only apply to households where both parents are working.
A full summary of the Spring Budget 2023 will be forwarded when available.
Warmest Regards.
Best Price FS Team |
