“We won’t rest until we’re Europe’s most dynamic enterprising economy.” – Chancellor Jeremy Hunt
Jeremy Hunt announced his second fiscal statement and first Budget since becoming Chancellor, against a backdrop of fragile public finances, an ongoing cost of living crisis, and increased government borrowing.
In January, the Chancellor appealed to the nine million ‘economically inactive’ people in the UK, specifically retirees, claiming: “to those who retired early due to the pandemic, or haven’t found the right role after furlough I say, Britain needs you.”
Ahead of time, then, we expected the Chancellor’s speech – dubbed the ‘back to work Budget’ by the media – to focus on the government’s economic priorities: halving inflation, growing the economy, and reducing national debt.
With a surprise surplus of £5.4 billion in January due to record self-assessment tax payments, and year-to-date borrowing undershooting the Office for Budget Responsibility (OBR) forecast by £30.6bn, the question has been whether Hunt would pay off some of what the UK owes, or funnel it back into the economy.
With that in mind, the Chancellor’s speech highlighted a plan of two halves: a series of short-term measures designed to provide immediate support to businesses and households, and a longer-term strategy for growth.
But, how does his Budget stack up against the government’s priorities – and what does it mean for people and businesses across the UK?
We’ve outlined the main announcements from the statement below and have put together a report with all the details, which you can download here >.
Personal announcements
Pensions lifetime allowance scrapped
In the run-up to the Budget, many speculated that Hunt would increase the pensions lifetime allowance (LTA) to allow people to increase the amount they receive in retirement.
Instead, he scrapped the limit altogether, claiming this would incentivise over-50s to work for longer.
Energy price cap remains
Following pressure to provide extra support for households struggling with soaring energy bills, the Chancellor announced a three-month extension of the energy price guarantee.
At the moment, the scheme caps the average household’s energy bills at £2,500 a year. This limit was due to rise to £3,000 from April 2023 onwards.
See details of all personal announcements in our Spring Budget Report:
Business announcements
£9 billion per year super-deduction replacement
With the annual super-deduction due to end before the start of the new tax year, the Chancellor has announced that the government will introduce a “full expensing” scheme to encourage companies to invest in plant, machinery and technology.
From 01 April 2023 until 31 March 2026, companies across the country will be able to claim back 100% of their qualifying costs. For the next three years, the government says 99% of companies will be able to immediately reclaim every pound invested.
R&D tax relief
During the Autumn Statement in 2022, the Chancellor announced measures to reduce fraudulent research and development claims by lowering the amount SMEs can claim in R&D expenditure.
In the Spring Budget, however, Hunt said the government will introduce a new scheme for loss-making, “R&D intensive” SMEs. Companies that spend at least 40% of their total expenditure on R&D will be considered R&D intensive.
These R&D-focused SMEs will be able to claim a higher payable credit rate of 14.5% rather than the reduced 10% announced in the Autumn Statement.
In practice, this means they’ll be eligible to claim back £27 for every £100 they spend.
Corporation Tax rises as expected
As previously announced, the Corporation Tax rate will increase from 19% to 25% in April 2023 but with marginal relief for businesses with profits between £50,000 and £250,000.
According to Hunt, only 10% of companies will pay the 25% rate, and the UK has the lowest rate of Corporation Tax in the G7.
For full details of all business announcements made, read our full Spring Budget Report:
Other announcements
Fuel duty
Fuel duties will be maintained at current levels for an additional 12 months, cancelling the planned increase in line with inflation for 2023/24.
The government will spend over £5 billion maintaining fuel duty at current levels for the next 12 months, including keeping the 5p cut in place.
Charity support
The government is providing over £100m of support for charities and community organisations in England for those most at risk due to increased demand from vulnerable groups and high delivery costs.
Tax simplification
The government will collaborate with businesses and representative bodies to review tax guidance for small businesses over the next two years to help them interact with the tax system.
For full details of all business announcements made, read our full Spring Budget Report:
We can help
If you have any questions about how the announcements in the Spring Budget may affect you, your family or your business, please get in touch
