Spring 2023 Budget
Here's our summary of the key announcements in the Chancellor’s Budget statement on Wednesday 15 March 2023.
The timing of the Budget, reverting to the traditional Spring, was dictated by politics. Mr Hunt’s two immediate predecessors had not lasted long enough as Chancellor to present a Budget at all, and the need for what he yesterday called ‘stability and sound money’ meant that most of the tax measures for 2023/24, including all the rates and allowances, had already been announced in his Autumn Statement.
With inflation forecast to fall to 2.9% by the end of the year, Mr Hunt barely mentioned the cost of living or public spending. His main theme was that, having narrowly avoided a full recession, the country needed to encourage growth and improve productivity by encouraging the ‘inactive workforce’ back into the job market and increasing capital investment. Measures to this effect included:
- The pensions Lifetime Allowance of £1.073 million will be abolished, effectively from 6 April 2023. The aim is to allow retired NHS consultants to return, but the measure applies universally.
- The pensions Annual Allowance will increase from £40,000 to £60,000. It will still taper off at higher income levels, but to £10,000 rather than the current £4,000.
- A 100% deduction will be allowed against taxable profits of companies for expenditure on new plant and machinery, and 50% for new fixtures. This will apply for the next three tax years at least.
- £5 billion will be spent to give 30 hours of free childcare per week, of 38 weeks of the year, to working parents of all children between 9 months and the start of school. This is being phased in between April 2024 and September 2025.
Matters not covered in the speech include:
- From 1 April 2023, Companies wanting to make Research & Development claims will have to notify their intention online within 6 months of their year-end.
- Separating spouses will now have three years to make transfers between them without Capital Gains Tax consequences.