Spring Budget 2023: Budget for Growth

20th March 2023

Chancellor Jeremy Hunt delivered a ‘Budget for Growth’ after the Office for Budget Responsibility (OBR) forecast a stronger than expected performance from the UK economy this year with inflation continuing to fall.

On 15 March 2023, Mr Hunt delivered the Spring 2023 Budget, the OBR now predict welcomed news that the UK will avoid going into recession this year. The Chancellor also revealed via the OBR that the rate of inflation is also set to fall to 2.9% by the end of 2023.

Despite the challenges posed by weak economic growth and high inflation, there are encouraging signs that the economy is proving more resilient than expected. Developments since November 2022 have been largely positive, leading to a brighter outlook for public finances.

The Budget for Growth aims to achieve long-term sustainable growth, halve inflation and reduce debt. There are incentives aimed at getting people back to work in order to boost productivity.

Detailed below are key highlights and summary points relevant to business and SME’s:

Tax

Corporation Tax to increase from 19% to 25% for businesses with taxable profits over £250,000. Businesses with profits between £50,000 and £250,000 to pay between 19% and 25%. No change for businesses making profits less than £50,000. The Chancellor outlined that only 10% of companies are set to pay the new full rate.

Fuel Duty has been frozen again. The 5p cut to petrol and diesel, due to end in April 2023, will remain in place for another year.

Businesses can deduct investment in new machinery and technology to lower taxable profits. The Super-Deduction has been replaced with full expensing.

Increase in Draught-Relief extended to 9.2%, higher than the 5% duty discount that was due to come in from August 2023. These changes mean the duty on an average draught pint of beer served in a pub does not increase from August and will be up to 11p lower than the duty in supermarkets.

12 new Investment Zones to be created across the UK, covering West Midlands, Greater Manchester, North East, South Yorkshire, West Yorkshire, East Midlands, Teesside, and Liverpool. At least one investment zone each in Scotland, Wales and Northern Ireland. There will be certain employer National Insurance (NI) savings within those investment zones.

The Pension Lifetime Allowance before paying extra tax – currently £1.07m – has been abolished. The pensions annual tax free allowance will rise by 50% from £40,000 to £60,000. This threshold is rising from £240,000 to £260,000 from 6 April 2023, and means for every £2 you earn above the threshold, your annual allowance reduces by £1. The cap on the amount you can save into pensions over a lifetime will be scrapped.

After gutting SME R&D Tax credits in November 2022, this will be partly rowed back with enhanced credits for businesses that have R&D as 40% of turnover.

Workforce

Skills boot camps and apprenticeships targeted at over 50s to encourage people to return to the workplace.
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.
£600 incentive payments for those becoming childminders and relaxed rules in England on how many children childminders can look after.
A new voluntary employment scheme, Universal Support, announced for disabled people and those with health conditions in England and Wales.

Energy

Energy support for households has been extended for three months until the end of June.
No changes were announced to the Energy Bills Discount Scheme for businesses, which will run from 1 April 2023 to 31 March 2024.

Trade

Commitment to ease customs declarations for small businesses that trade internationally.

Following the above points you can access the Spring Budget 2023 official source here: https://www.gov.uk/government/publications/spring-budget-2023

Overall, the Spring 2023 Budget for Growth statement provides a hopeful and positive outlook for the future of the UK economy, with indications of growth and stability in the years ahead.