Chancellor Jeremy Hunt unveiled the 2023 Budget on Wednesday. Although the word ‘unveiled’ may be a slight exaggeration. Not so long ago, the contents of each Budget were a closely guarded secret. Neither the press nor the public would know for sure what it would contain. Below is our summary of the most significant announcements to help you understand what the 2023 Budget means for you.
2023 Budget – Announcements
The Chancellor’s stated aim behind this budget was to halve inflation. He pointed out that the OBR now forecasts the UK won’t enter a technical recession. It has also forecast that inflation will fall from 10.7% to 2.9% by the end of 2023. In Mr Hunt’s words, the OBR “will meet the Prime Minister’s priorities to halve inflation, reduce debt and get the economy growing”.
Business
- Investment Zones. Eight locations in England are now eligible to host these, with four more planned across Scotland, Wales and Northern Ireland.
- Corporation Tax increases to go ahead. However, only 10% of firms will pay the full 25%.
- Super Deduction scrapped and replaced with ‘100% full expensing’ tax relief on plant and machinery investment. This reduces tax by up to 25p for every £1 spent. This will come into force on 1st April 2023.
- Research and Development. With every £100 spent by qualifying SMEs on R&D, they will be able to claim £27 back.
Employment
- £11.5 million employment support for Ukrainians who have arrived in the UK under the Ukraine Visa Schemes. This will include English language training and specific employment support.
- Universal Support Scheme to help disabled people and those with long-term conditions to find jobs and stay in work. Up to £4,000 to be spent per person.
- £400m plan to help people with long-term conditions back into work, including those with mental health and musculoskeletal problems. They’ll be given access to employment advisors and there’ll be more community hubs that offer health support.
- Older people. Skills boot camps will be available for people in their 50s.
Pensions
Pension tax reform. Lifetime allowance abolished. Annual pensions tax-free allowance to rise from £40,000 to £60,000. The aim is to ensure skilled workers such as doctors remain in the workforce.
Energy
- The Energy Price Guarantee will remain at £2,500 per year for a typical household until the end of June 2023.
- Prepayment meters. The charges for premium energy prepayment meters will be made comparable to the charges for comparable direct debit and prepayment meter customers. This is expected to save affected households an average of £45 annually.
- Carbon capture and storage. £20 billion to help decarbonise the economy and reach ‘Net Zero’ by 2050.
- Nuclear. Formation of ‘Great British Nuclear’ to enable nuclear projects and encourage investment. Nuclear energy to be reclassed as ‘environmentally sustainable’ to give it access to the same investment incentives as renewables.
Fuel & Transport
- Fuel duty frozen for the next 12 months.
- Potholes. An extra £200 million to help solve this perennial problem across the country. The aim is to fix 4 million potholes.
- Local transport. £8.8 billion to help develop mass transit networks and sustainable transport.
‘Sin’ Taxes
Duty on average strength draught beer frozen. A Brexit Pubs Guarantee will mean pubs always pay less tax on a pint (up to 11p) than a supermarket.
Benefits
- More rigorously applied Universal Credit sanctions for those who fail to meet strict work requirements or who don’t take up reasonable job offers.
- Parents on Universal Credit who move into work or increase their hours will have almost 50% of childcare costs paid upfront. Families can claim £951 for one child and £1,530 for two children.
Other Announcements
- £63 million to support leisure centre pools at a time of high costs, helping to keep them open.
- £33 million to support veterans from the armed forces.
- Local devolution. Two devolution deals with Greater Manchester and the West Midlands authorities to give them greater control over local policies.
- Levelling Up. £400 million to roll out Levelling Up Partnerships, helping to regenerate 20 places across England.
- Culture. Tax relief of 45%-50% will remain in place for theatres, orchestras, museums and galleries until 2025.
- Emerging technology. Government will accept the UK’s Science Chief, Sir Patrick Vallance’s recommendations to regulate future digital technologies such as AI. There will also be a £1m annual prize for AI research over the next ten years.
- Foster carers. Tax free allowance to rise from £10,000 to £18,000.
- Childminders. New entrants to the profession to get £600, rising to £1,200 for those joining through an agency.
- Childcare. Up to 30 hours of free childcare per week for children aged between 9 months and 4 years. This is to be introduced incrementally.
Overall, this was a much more complex and detailed Budget than we have seen for some time. There was some welcome news for SMEs in particular with the R&D and 100% full expensing relief. However, many will be disappointed that the proposed Corporation Tax remains in place. For individuals, the pension announcements are likely to be particularly welcome.
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Need help? Get in touch
If you would like more detailed, one-to-one advice on any of the issues raised in the Chancellor’s Budget speech, please do get in touch with our team. Call us on 01904 655202, or email our tax team:
