Spring Budget - 15th March 2023

Chancellor Jeremy Hunt has delivered his first Budget and says the UK will avoid a technical recession this year, according to the Office for Budget Responsibility forecasts. Inflation is also forecast to fall from 10.7% last year to 2.9% by the end of this year. The economy is forecast to grow by 1.8% in 2024.

We will be publishing our full report but meantime see below key changes:

Energy bills

Hunt confirms the Energy Price Guarantee will remain at £2,500 for the typical household for the next three months. He says this will save the average family a further £160 on top of support measures already announced. He also announced that the so-called "prepayment premium" - where customers who use energy prepayment metres pay more than those on direct debit - would be scrapped from July. 

Pensions allowance changes

Hunt announced the pension Lifetime Allowance - previously set at £1.07m will be abolished. In an attempt to encourage individuals back into work or to avoid plans of early retirement - this means no pension lifetime allowance tax. However, the cap on tax free cash remains at £268,275.

The pension annual allowance will increase from £40,000 to £60,000 from 6th April 2023. They will also increase the money purchase annual allowance from £4,000 to £10,000 and the minimum tapered annual allowance also from £4,000 to £10,000 from 6th April 2023.  

Childcare costs

Hunt announces 30 hours of free weekly childcare, with at least 15 hours per week available to all, is being extended to cover children below the age of three. It will cover all children from the age of nine months, he says. It will only apply to households where both parents are working and the provision applies within normal school term-time - so 38 weeks of the year.

Funding for schools and local authorities to increase supply of wraparound care so all parents of school-age children can drop their children off between 8am and 6pm.

Investment zones

Hunt announces the intended creation of 12 new Investment Zones (think Canary Wharf). They will be spread across the West Midlands, Greater Manchester, the North East, South Yorkshire, West Yorkshire, East Midlands, Teesside and Liverpool. There will also be at least one in each of Scotland, Wales and Northern Ireland.

Corporation Tax

Corporation tax for businesses is to increase as planned, from 19% to 25%.  Firms which make a profit of more than £250,000 will pay 25% tax on their profits from April.

Small businesses investment allowance increased to £1m

For smaller businesses the Annual Investment Allowance has increased to £1m, meaning 99% of all businesses can deduct the full value of all their investment from that year’s taxable profits, Hunt says.

Tax boost for smaller and medium businesses

Small or medium-sized businesses will be able to claim a credit worth £27 for every £100 they spend if they spend 40% or more of their total expenditure on Research and Development.

Fuel duty

Fuel duty will remain frozen and a 5p reduction will be maintained for a further year.

Alcohol Duty

Duty rates will rise in line with RPI.  From 1st August the duty on draught products in pubs will be 11p lower than the duty in supermarkets.