Spring Budget 2023 - An Overview

The Chancellor Jeremy Hunt delivered his Spring Statement amidst a backdrop of challenging inflation and the cost of living crisis.

It appears there’s reason to be hopeful as the Chancellor announced that the UK economy is performing better than expected. The OBR forecasts that despite contracting by 0.2% this year the economy will avoid recession in 2023, before returning to growth in 2024. The rate of inflation is also predicted to fall to 2.9% by year end. This will enable businesses you to plan with greater certainty than previously hoped.

Some key points from the Spring Statement that may impact your business...

Small businesses investment allowance increased

The Annual Investment Allowance for small businesses has been increased to £1m, meaning 99% of all businesses can deduct the full value of investments from the previous year’s taxable profits.

Super deduction replaced

The super deduction introduced during the pandemic will end this month. It will be replaced by full-expensing, meaning companies incurring qualifying expenditure when purchasing new plant and machinery on or after 1 April 2023 will be able to claim new temporary first-year allowances. You can discuss these types of allowances with us to make the most of the opportunities now available to you.

It’s hoped these initiatives will help offset the rise in corporation tax that will impact businesses making £250,000 profit on their products from April 2023.

12 new investment zones introduced

The Chancellor wants to create “Canary Wharf” investment zones across 12 areas in the UK. Each investment zone will receive £80 million in funding and the identified areas are as follows: 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.

Energy support extended by three months

The Energy price guarantee that caps typical household energy bills at £2,500 was set to expire on 1 April 2023. This has been extended for a further three months and will now expire in June 2023.

Fuel duty cut renewed for a further year Fuel duty will be frozen and the 5p reduction will be maintained.

Lifetime allowance abolished

The Chancellor has removed the lifetime allowance on pensions, meaning the amount an individual can accumulate in their pension pot before paying additional tax is no longer applicable. The Government has promised this will come into effect at the earliest possible opportunity during a future finance bill.

The amount people can save into their pension before paying any tax at all has risen to £60,000 from the previous level of £40,000.

If you need help assessing how these changes could impact your business please get in touch with us.

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