On Wednesday 15 March, Jeremy Hunt, the Chancellor of the Exchequer, addressed the Commons to deliver the Spring Budget 2023, with an aim to bring people back into the workforce. Mr Hunt commented that the Office for Budget Responsibility (OBR) expects inflation to fall from 10.7% to 2.9% by the end of 2023.
The Chancellor said the OBR now forecasts the UK will not enter a technical recession this year. But despite narrowly avoiding recession, living standards are still predicted to fall by 6% within this fiscal year and the next.
Key budget announcements included the abolishing of the Lifetime Allowance on tax-free pension contributions, which was previously set at £1,073,100. The tax-free annual pension allowance for pension pots will also rise from £40,000 to £60,000 from 6 April 2023.
Working parents in England are to receive 30 hours of free childcare a week, though this won't be fully implemented until 2025.
Fuel duty has been frozen again whilst help with energy bills will remain for an extra three months and disabled people can apply for up to 50,000 places on a new voluntary employment scheme funded by the government. The chancellor also confirmed that Corporation Tax will rise from 19% to 25% in April.
What does the Spring Budget Statement 2023 mean for you, your family and business?
• Lifetime allowance on pensions abolished to boost economic growth.
• Fuel duty frozen, and the proposed 5p increase in April scrapped.
• Government subsidies limiting household energy bills to £2,500 a year extended to June 2023.
• Annual ISA Subscription to remain at £20,000.
At a glance, what the Chancellor had to say
With many topics coming up for discussion during the Spring Statement, we have compiled a quick bullet pointed overview of some of the key points.
To read our full analylis click on any of the images in this news post to access our full pdf guide.
Public Finances and Economy
• Office for Budget Responsibiity predicts the UK will avoid recession in 2023, but the economy will shrink by 0.2%
• Growth of 1.8% predicted for next year, with 2.5% in 2025 and 2.1% in 2026
• UK inflation is expected to fall to 2.9% by the end of this year
Taxation
• Tax-free annual pension allowance for pension pots rises from £40,000 to £60,000, the change coming into force from 6 April 2023
• Money purchase annual allowance (MPAA) will rise from £4,000 to £10,000 from April 2023
• Annual subscription allowance for adult Individual Saving Accounts (ISAs) to remian at £20,000
• Junior Individual Saving Accounts (JISA) and Child Trust Fund accounts remain at £9,000
• Fuel duty frozen, and the 5p cut to fuel duty on petrol and diesel, due to end in April, kept for another year
Energy
• Government subsidies limiting typical household energy bills to £2,500 a year extended for three months, until the end of June
• Commitment to invest £20bn over the next two decades on low-carbon energy projects, with a focus on carbon capture and storage
• Nuclear energy to be classed as environmentally sustainable for investment purposes, with promise of more public funding
• £63m to help leisure centres with rising swimming pool heating costs, and investment to become more energy efficient
Jobs and Employment
• 30 hours of free childcare for working parents in England expanded to cover one or two-year-olds, to be rolled out in stages from April 2024
• £600 ‘incentive payments’ for those becoming child minders, and relaxed rules in England to let childminders look after more children
• New voluntary employment scheme for disabled people in England and Wales, called Universal Support
• £63m for programmes to encourage retirees over 50 back to work, returnerships and skills boot camps
• Imigration rules to be relaxed for five roles in construction sector, to ease labour shortages
Business and Enterprise
• Main Corporation Tax rate will increase from 19% to 25% with affect from 1 April 2023
• Companies with profits of between £50,000 and £250,000 will receive marginal relief
• Companies with profits of less than £50,000 will continue to pay Corporation Tax at 19%
• Tax breaks and other benefits for 12 new Investment Zones across the UK, funded by £80m each over the next five years
Other Measures
• Commitment to raise defence spending by £11bn over the next five years
• £200m this year to help local councils in England repair potholes
• An extra £10m over the next two years for charities in England helping to prevent suicide
• £900m for new super computer facility, to help UK’s AI industry
Following the annoucements by the Chancellor, Jeremy Hunt, if you want to discuss how these measures could affect your personal finances or business, we’re here to listen.
To find out more or to speak to one of our financial planners, contact us on 01633 840000 or info@kymin.co.uk