Chancellor of the Exchequer Jeremy Hunt delivered his Spring Budget to Parliament today, tasked with getting the economy back on track. In this article, we provide a breakdown of the key announcements from the Spring Budget 2023.
What does the Spring Budget mean for workers?
- The pension lifetime allowance, previously set at £1,073,100 has been abolished meaning workers will be able to save more into their pensions without facing additional tax charges. The change is designed to stop workers from reducing their hours or retiring early to avoid large tax charges being applied to their pensions. We explain more in our article 'Budget 2023 pension changes: Boost for wealthy savers and high-earners'
- The pension annual allowance - the amount that you can pay into a pension in each tax year while still receiving tax relief - has increased from £40,000 to £60,000 per year
- The Money Purchase Annual Allowance (MPAA) & the tapered annual allowance have been increased from £4,000 to £10,000 - this will affect those earning over £260,000 (form April 2023) and those who are drawing on their pension while still working
- Introduction of a £400m plan to increase the availability of resources for those suffering from mental health or musculoskeletal conditions
- Changes to how sickness benefit payments are assessed, meaning claimants can continue to receive proportional benefits after returning to work
- A new programme labelled 'universal support' has been launched in England and Wales. It is a new voluntary employment scheme for disabled people, providing up to £4,000 per person, providing the support they need to get into employment. The programme will fund 50,000 places every year.
- As expected, personal allowances have been frozen, pushing more workers into higher-rate tax bands (often referred to as 'bracket creep')
What does the Spring Budget mean for families?
- Free childcare for working parents has been broadened meaning parents of one and two-year-olds will soon be eligible for 30 hours of free childcare per week. It will be available to households where all adults are working at least 16 hours per week and can be accessed from when the child reaches 9 months. It will be introduced in stages where working parents of two-year-olds will be able to access 15 hours of free childcare from April 2024, extended to all children from 9 months in September 2024. Then, from September 2025, this will be increased from 15 hours of free childcare to 30 hours. We explain more in our article 'Working parents to get 30 hours free childcare support'.
- Parents receiving universal credit will now be able to receive childcare funding upfront, rather than having to claim it back
- The monthly cap of £646 per child for universal credit claimants has been increased to £951(£1,631 for two children)
- Additional funding to increase the supply and availability of wraparound care, with the aim that all schools are able to provide a full wraparound offering by September 2026
- The Energy Price Guarantee has been extended for a further 3 months, meaning it will now end in June 2023, rather than April 2023 as originally announced in the Autumn statement. Jeremy Hunt said 'With energy bills set to fall from July onwards, this temporary change will bridge the gap and ease the pressure on families, while also helping to lower inflation too.' We provide further information in our article 'Energy Price Guarantee extended until June – what this means for you'
- Charges for prepayment energy meters will be brought in line with comparable direct debit customers signalling the end of energy premiums for the UK's poorest households
- Qualifying foster carer's household tax exemption will rise from £10,000 to £18,000 next year
What does the Spring Statement mean for motorists?
- 5p cut to fuel duty has been maintained with a freeze on fuel duty rises for a further 12 months, saving the average driver around £100 over 12 months
- The potholes fund has received a £200m boost, totalling £700m next year in an effort to fix the UK's crumbling roads
What does the Spring Statement mean for businesses?
- £63m in funding to keep public leisure centres and pools afloat
- Tax duty on draught products in pubs will be up to 11p lower than tax duty on supermarket alcohol. The change also applies to all public houses in Northern Ireland
- Increased funding paid to nurseries providing free childcare; £204m from September 2023, rising to £288m in 2024
- New policy to enable full capital expensing for the next 3 years, meaning expenses including IT equipment and machinery can be deducted in full and immediately from taxable profits
- Enhanced credit ensures qualifying small and medium-sized businesses that spend 40% or more of their total expenditure on R&D, will be entitled to claim a tax credit worth £27 for every £100 they spend
- Up to £20bn of support for early development of carbon capture, utilisation and storage (CCUS)
- Nuclear power to be classed as 'Environmentally sustainable' to encourage private sector investment into the government's nuclear programme
- £10m in funding for charities tackling suicide
- Confirmation that corporation tax is set to rise from 19% to 25% at the beginning of the new tax year for companies with profits over £250,000