Spring Budget 2023

Spring Budget 2023

After presenting a Budget-in-all-but name with the Autumn Statement, the Spring Budget was delivered against the backdrop of a day of widespread industrial action. The run-up to the event appeared deliberately downplayed, apart from a late flurry of leaks highlighting a focus on childcare at one end of the scale and pensions at the other.

While acknowledging the Prime Minister’s two objectives of halving inflation and reducing debt, Mr Hunt focused his Spring Budget on the Prime Minister’s third objective – getting the economy going.

SMH Group, a leading firm of Chartered Accountants and Financial Advisers headquartered in Sheffield, presents the key points of the Spring Budget that was delivered amongst a backdrop of widespread industrial action.

In a wide-ranging and longer than usual speech, there were some key headline items:

• The inflation rate is forecast by the Office for Budget Responsibility to fall from 10.1% (January 2023) to just 2.9% by the end of 2023
• The lifetime allowance for pensions will be abolished from April 2024, with the lifetime allowance charge withdrawn from April 2023
• A new monetary limit for the tax-free pension commencement lump sum will be introduced for 2023/24 of £268,275 (equivalent to 25% of the current standard lifetime allowance)
• The annual allowance for pensions will increase by 50% to £60,000 from 2023/24 and the money purchase annual allowance will rise from £4,000 to £10,000 from 2023/24
• Small and medium-sized enterprises that spend 40% or more of their total expenditure on research and development can claim a tax credit worth £27 for every £100 they spend from April 2023
• The energy price guarantee is maintained at the current £2,500 level until the end of June 2023.
• Up to 30 hours of free childcare per week will be available to working parents of children from the age of nine months by September 2025. Initially, from April 2024, working parents of two-year-olds will be able to access 15 hours of free childcare per week
• The scheduled 11p a litre duty increases in petrol and diesel will not go ahead

Tax rates for 2023/24

While the majority of the 2023/24 tax rates were released in the Autumn Statement, some changes involved unwinding the announcements of Mr Hunt’s predecessor.

With inflation and cost of living concerns foremost for the majority of individual and business taxpayers, the Chancellor needed to balance longer-term economic imperatives with perhaps shorter-term political concerns.

The key tax changes you should bear in mind for 2023/24 are:

• Most main tax allowances and reliefs remain frozen at their 2022/23 levels, with the exception of the reduced threshold for additional rate taxpayers, which is cut to £125,140 for 2023/24
• The dividend allowance for 2023/24 is cut from £2,000 to £1,000
• The capital gains tax exempt amount is reduced from £12,300 to £6,000 for 2023/24
• The corporation tax increase announced by Rishi Sunak when he served as the Chancellor pushes the rate to 25%
• Companies investing in new plant and machinery in the three years from 1 April 2023 can claim a first-year allowance of up to 100% of expenditure

As ever the Budget documentation contained a wealth of detail and much to digest, our Budget Summary highlights the key aspects likely to affect you.

If you have any questions about what you should do next, please get in touch with SMH Group on 0114 266 4432 or [email protected]