Spring Budget Summary 2023

The Chancellor, Jeremy Hunt, announced his Spring Budget as a “Budget for Growth” on Wednesday, 15 March, setting out the Government's tax and spending plans, accompanied by a forecast from the OBR.

This Spring Budget 2023 was an opportunity for the Chancellor to provide an update on the economic progress made from policies set out in the Autumn 2022 Statement, and to announce new tax measures and spending plans. Here's a summary of the key findings.

Overview

• Most tax rates and allowances were announced in advance at the Autumn Statement, so the Budget focused more on spending than on tax

Personal tax

• The main personal tax-free allowance and the 40% tax rate threshold remain frozen at their 2022/23 levels until the end of 2027/28, representing a tax rise where income increases
• The 45% threshold is lowered from £150,000 to £125,140 for 2023/24
• Tax-free dividend allowance falls from £2,000 to £1,000, and the Capital Gains Tax annual exempt amount falls from £12,300 to £6,000, for 2023/24
• Pension savings thresholds significantly increased: from 6 April 2023, Annual Allowance rises from £40,000 to £60,000 (with related changes to tapering) and Lifetime Allowance Charge is abolished; maximum tax-free lump sum remains 25% of former Lifetime Allowance, i.e. £268,275
• ISA investment limit remains £20,000
• Increase in limit for shares that can be granted under Company Share Ownership Plans confirmed at £60,000
• Seed Enterprise Investment Scheme limits increased from 6 April 2023 – maximum for investor is doubled to £200,000
• Inheritance Tax thresholds and rates unchanged to the end of 2027/28

Business tax

• Confirmation of corporation tax rate increase from 19% to 25% from 1 April 2023 for profits over £250,000
• ‘Super-deduction’ for plant and machinery bought up to 31 March 2023 replaced by 100% first-year allowance (“full expensing”) for qualifying capital expenditure, without upper limit, for three years from 1 April 2023
• Confirmation of previously-announced changes to Research & Development tax reliefs from 1 April 2023, comprising changes to the rates of relief under the RDEC and SME regimes and measures to improve compliance. A new measure in the Budget softens the impact of the reduced rate of relief for R&D intensive, loss-making SMEs, for whom the repayable credit rate will remain at 14.5% (albeit based upon the new lower enhanced deduction of 86%)
• Reforms to audio-visual tax reliefs from 1 April 2024
• Announcement of 12 ‘Investment Zones’ to be established throughout UK with incentives for investment and employment

Other measures

• Energy Price Guarantee retained at £2,500 for average household for another 3 months to 1 July 2023
• Significant expansion of free childcare provision to be phased in from April 2024
• Fuel duty frozen, and temporary 5p reduction retained, for another year
• Introduction of ‘Returnerships’ – similar to apprenticeships – to encourage over-50s back into work

Our team of tax specialists shared their insights and understanding of the key Budget changes from the Spring Statement by the Chancellor, Jeremy Hunt, in the context of other developments and how this could impact on you and your UK business. You can view the webinar here.

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