Spring Budget Wednesday 15 March 2023 Simple Budget Summary
Posted on 24th March 2023 by Dominique Childs
The Chancellor, Jeremy Hunt, presented his Spring Budget on Wednesday 15 March 2023.
This was a relatively Low-key Budget, but there were still some announcements to take note of.
What were the highlights?
The Chancellor’s second Budget speech largely focused on incentives to work for parents, older people, and carers, rather than on tax measures.
The corporation tax increase from 1 April 2023 (first announced in 2021) was confirmed, and the main rate will be 25% after that date.
30 hours free childcare for working parents in England expanded to cover one and two-year-olds by September 2025. This will be introduced in phases from April 2024, starting at 15 hours.
There were major announcements relating to pensions.
Currently, individuals are subject to two thresholds with tax charges imposed where these are exceeded. The first is the annual allowance (AA), which is the maximum amount tax relieved contributions that can be made in a pension input period (which coincides with the tax year). This has been set at £40,000 for a number of years. The AA will increase to £60,000 from 2023/24.
The second threshold is the Lifetime Allowance, which was £1.07m. It was widely rumoured that this would increase to £1.8m in an effort to dissuade those with high pension savings from taking early retirement to avoid tax charges. Instead, the LA charge has been removed for 2023/24, and will be scrapped altogether from 2024/25.
The money purchase annual allowance will increase from £4,000 to £10,000 from 2023/24. This replaces the AA in some situations where an individual has already accessed pension savings, so may benefit people coming out of retirement.
Business Capital Allowances
Annual Investment Allowances – Annual Investment Allowance was previously confirmed at a permanent rate of £1m from April 2023.
‘Full expensing’ deduction – In order to replace the super-deduction, a new ‘Full Expensing’ deduction is announced from 1 April 2023 until 31 March 2026. The relief allows companies to claim 100% first-year deduction from profit before tax (50% for special pool rate) on qualifying new main-rate plant and machinery investments.
This latest government announcement, along with high inflation, higher interest rates, high energy prices and shortages of people & materials mean that now is the time to ensure you have a tight grip on your numbers and a clear financial plan.
Please call if you need more information on any of the announcements made, or to learn more about how Steven Burton & Co can help you to better understand your business finances.
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