SPRING BUDGET SUMMARY 2023

Kathryn

There were some welcome announcements in today’s budget, most notably the retention of the £2,500 energy cap and reforms to childcare including the proposed extension of 30 hours free childcare to all children between 9 months and 5 years old.

However, it could be argued that the big winners are those in the top 1% of earners: individuals who can invest more than £40,000 each year into their pension, individuals whose pension pots are worth more than £1 million and companies who have annual capital expenditure of more than £1 million.

Individuals

No changes to previous announcements in the Autumn 2022 budget:

  • Personal allowance to remain at £12,570 until April 2028 (previously 2026).
  • Higher rate threshold to remain at £50,270 until April 2028 (previously 2026).
  • Inheritance tax nil-rate bands to remain frozen until April 2028 (previously 2026).
  • Top rate threshold at which income is taxed at 45% falls from £150,000 to £125,140 from April 2023.
  • Capital gains tax annual allowance to fall from £12,300 to £6,000 from April 2023 and then £3,000 from April 2024.
  • No changes to savings starting rate allowance (£5,000) or personal savings allowance (£500 or

£1,000 for lower and higher rate taxpayers).

  • Employee National Insurance payment threshold to remain in line with the personal allowance until April 2028.
  • Minimum wage to increase from £9.50 to £10.42 per hour from April 2023 for those aged 23 and over.

This is new:

  • Increase in pension annual allowance from £40,000 to £60,000.
  • Abolition of the pension lifetime allowance (previously frozen at £1,073,100).

Businesses & self-employed

No changes to previous announcements in the Autumn 2022 budget:

  • The class 4 National Insurance Threshold increases to £12,570 from April 2023 with a restoration of the 9% rate (currently 9.73% over £11,908).
  • Class 2 National Insurance Threshold also increases to £12,570 from April 2023 at a rate of £3.45 per week.
  • Employer National Insurance payment threshold to be fixed at £9,100 from April 2023 to April 2028.
  • Employment allowance to remain at £5,000.
  • The VAT registration threshold remains fixed at £85,000 until April 2026.

Companies & shareholders

No changes to previous announcements in the Autumn 2022 budget:

  • The tax-free dividend threshold to fall from £2,000 to £1,000 from April 2023 and then £500 from April 2024.
  • Corporation Tax Main Rate will be increased to 25% from 1 April 2023 for profits over £250,000.
  • Corporation Tax Small Companies Rate introduced at 19% from April 2023 for profits under £50,000.
  • Marginal rates of corporation tax will apply to profits between £50,000 and £250,000 from April 2023.

This is new:

  • A 100% first year allowance to be introduced to all companies for qualifying capital expenditure – in addition to the existing Annual Investment Allowance which currently provides 100% deductions for capital expenditure of up to £1 million annually.

Childcare reforms

  • Increased childcare funding for parents on Universal Credit.
  • Ambition for all schools to provide wrap-around care by 2026.
  • Increase in adult-to-child ratios for two-year olds to 1:5.
  • 30 hours of free childcare to be made available for 38 weeks a year for all children from 9 months to 5 years to be introduced in stages by 2025.
  • Increase in income tax relief for foster carers to £18,140.

Employment reforms

  • New apprenticeships for the over 50s returning to work, called returnerships.
  • Disability benefit reforms to separate benefit from work.
  • Stricter sanctions to be introduced for those who don’t look for work or accept reasonable job offers.
  • Universal Support programme to provide support and training to people with disabilities and long-term sickness.
  • Increase Work Coach support for Universal Credit claimants
  • Pilot scheme to support businesses with the cost of purchasing occupational health services.

Other announcements

  • Energy cap to remain at £2,500 for a further three months from April 2023.
  • The cost of prepayment meters is to be brought in line with standard direct debit costs.
  • Reforms to simplify income tax for trusts & estates with low income from April 2024.
  • Government to restrict the scope of agricultural property relief and woodlands relief from inheritance tax from April 2024.
  • £20 billion funding support for carbon capture, utilisation and storage.
  • Nuclear power to be re-classed as environmentally sustainable.
  • Theatre tax relief extended, and additional creative industries tax relief to be introduced.
  • New transport funding and measures to help combat ‘the curse of potholes’.
  • Fuel duty remains frozen.
  • Alcohol duty frozen and draft beer to carry an 8% discount over retail sales from August 2023.
  • Additional funding announced for leisure centres and mental health charities.
  • More new measures to tackle promoters of tax avoidance schemes.
  • More regeneration schemes and levelling up partnerships announced.
  • Additional funding available for Ukraine.
  • New processes for approving medicines by relying upon other countries approval.
  • Investment into AI and quantum computing.

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