Chancellor Jeremy Hunt has delivered his Spring Budget.

Here’s a summary of the key tax measures, and my reaction to the announcements…

Personal tax

  • Pensions: The Lifetime Allowance charge will be abolished, removing the cap on the amount workers can accumulate in pensions savings over their lifetime before having to pay extra tax. And the tax-free annual allowance for pension pots is being increased from £40,000 to £60,000.
  • Income tax: No changes to previously announced personal income tax and National Insurance thresholds and rates.

Business tax

  • Corporation tax: The Chancellor confirmed the main corporation tax rate will increase from 19% to 25% from 1 April 2023.
  • Capital allowances: A ‘full expensing’ policy will be introduced from 1 April 2023 until 31 March 2026 and an extension to the 50% first-year allowance in the same period.
  • Research and development: A £500 million per year package of support for 20,000 research and development (R&D) intensive businesses through changes to R&D tax credits.
  • Creative industry reliefs: The film, TV and video games tax reliefs will be reformed, becoming expenditure credits instead of additional deductions from 1 April 2024. And the temporary higher rates of theatre, orchestra, and museums and galleries tax reliefs will be extended for two further years from April 2023.
  • Investment zones: Launch of “refocused Investment Zones programme”, with tax breaks and other benefits for 12 new investment zones across the UK.

Indirect taxes

  • Fuel duty: The planned 11p rise in fuel duty will be cancelled, maintaining last year’s 5p cut for another year.
  • Alcohol duty: Duty rates under the revised structure on all alcoholic products produced in, or imported into, the UK are being increased in line with the Retail Price Index (RPI). The new draught relief is being increased from 5% to 9.2% for qualifying beer and cider products, and from 20% to 23% for qualifying wine, spirits-based and other fermented products. These changes will take effect from‌‌‌ ‌1 August‌‌‌ ‌2023.

What else is in the Spring Budget?

Other measures include:

  • Energy Price Guarantee (EPG): The Government will keep the EPG across the UK at £2,500 per year for the typical household for an extra three months (April to June 2023). So, the planned increase to £3,000 per year will be implemented on 1 July, rather than 1 April as previously announced.
  • Childcare: 30 hours of free childcare for every child over the age of nine months, with support being phased in until all eligible working parents of under-5s get this support by September 2025. The Government will also pay the childcare costs of parents on Universal Credit moving into work or increasing their hours upfront, rather than in arrears. And the maximum they can claim will be boosted to £951 for one child and £1,630 for two children.
  • Agent access to payrolling Benefits in Kind (BiK): Delivery of IT systems to enable tax agents to payroll BiK on behalf of employers.
  • Tax fraud: The maximum sentences for the most egregious cases of tax fraud to double from seven to 14 years.
  • Tax avoidance: The Government will consult on the introduction of a new criminal offence for promoters of tax avoidance who fail to comply with a legal notice from HMRC to stop promoting a tax avoidance scheme.

Meanwhile, the Office for Budget Responsibility (OBR) said the economic and fiscal outlook had “brightened” since November. It said the near-term downturn was set to be shallower; medium-term output to be higher; and the budget deficit to be lower. But the OBR added that persistent supply-side challenges remained.

My thoughts on the Spring Budget

As expected, there were very little tax changes, which is good news after the chaos a few months ago of the Government’s changes and reversals. And it’s helpful the annual pensions allowance has been increased for those who wish to save for retirement.

This Budget seems to be very much about investment, which is what we need right now, and I hope it will have a positive impact on the economy.

Professional tax advice

For specialist tax advice, call our team on 07813 434195 or email: stephanie.churchill@churchilltaxation.co.uk

Steph Churchill

Stephanie Churchill

Managing director & co-owner of Churchill Taxation