Chancellor Jeremy Hunt delivered his first full Budget yesterday (15th March 2023) and unlike budgets in recent years, there were no major headline-grabbing tax changes.
It is only six months since Liz Truss and Kwasi Kwarteng’s Autumn mini budget, which did very much grab the headlines. The unprecedented economic shockwaves that followed those tax announcements were key events leading to Truss and Kwarteng ultimately being supplanted by Sunak and Hunt.
It’s therefore perhaps understandable that this budget was so cautious in terms of changes to tax. Rules, rates and allowances were largely left alone. Avoiding rocking the boat and so preventing any accompanying waves of economic turbulence appears to have been a key 2023 budget strategy.
The biggest announcements were not tax changes. The two items that were the biggest talking points for households were:
- The energy price cap continuing for a further three months from April.
- Additional childcare support to families with young children. This had previously applied for 3-year old pre-schoolers but will be extended to younger children.
Tax Changes
There were some tax changes made, we consider the key announcements below.
Pensions Allowances
In a move designed to persuade certain workers not to take early retirement pensions tax allowances were relaxed, in particular:
- The lifetime pension pot limit is set to be scrapped entirely.
- The annual allowance is set to be increased from £40,000 to £60,000.
Business Tax
Tax relief on company capital expenditure has been boosted in recent years. The ‘Super Deduction’ which gives 130% tax relief to a company’s qualifying capital expenditure runs to an end in April 2023. To replace this, the chancellor confirmed that a similar, but slightly less generous ‘full expensing’ scheme (of 100% relief rather than 130%) would be available for companies for three years, running to March 2026.
The Autumn Statement in November cut the rate of R&D tax credit from 14.5% to 10%. However, the Spring budget has re-instated that 14.5% rate for certain ‘R&D intensive’ businesses.
The budget confirmed that the previously announced rise to corporation tax is to go ahead. Rates are currently 19%. But from April 2023:
- For companies with profits above £250,000 the new rate will be 25%
- Companies with profits below £50,000 will still pay 19%
- Companies with profits between £50,000 and £250,000 will pay a rate between 19% and 25%.
If you would like more detail as to how this budget might affect you, or your business, please contact your Relationship Partner or our Tax Manager James May on 01482 888 820.