Summary of Jeremy Hunt’s Spring Budget Statement 2023
16 March 2023
The key theme of Jeremy Hunt’s first Budget delivered on Wednesday 15th March 2023 was “Getting Britain Back to Work” and improving the economy as a result. With changes planned for enterprise, employers, and workers, including adjustments to tax rates for all of these categories, Leavitt Walmsley Associates' (LWA) Tax Manager, Nickie Antley-Slater, has summarised the key points for businesses and individuals.
Summary for Businesses
Corporation Tax rates will be implemented as previously announced:
- First £50,000 of taxable profits taxed at 19%
- £50,001 - £249,999 taxable profits taxed at the marginal rate of 26.5%
- £250,000 + taxable profits taxed at 25%
Enterprise Management Incentive Schemes
Changes to the process to grant options – The government is simplifying the process to grant options under an Enterprise Management Incentive (EMI) scheme.
- From April 2023, the requirement for a company to set out details of share restrictions within the option agreement, and the requirement for a company to declare that an employee has signed a working time declaration will be removed.
- From April 2024, the government will extend the deadline for a company to notify HMRC of the grant of an EMI option from 92 days following grant, to the 6th July following the end of the tax year.
Annual Investment Allowance to remain at £1,000,000.
- Full expensing – From 1st April 2023 until 31st March 2026 investments made by companies in qualifying plant and machinery will qualify for a 100% first-year allowance for main rate assets. This means companies across the UK will be able to write off the full cost in the year of investment, known as ‘full expensing’. Companies investing in special rate (including long life) assets will also benefit from a 50% first-year allowance in the year of investment.
- Expenditure on plant or machinery for leasing is excluded from first -year capital allowances due to longstanding concerns about abuse and wide scope for error.
Research & Development (R&D)
- Additional tax relief for R&D intensive SMEs from 1st April 2023, a higher rate of relief for loss-making R&D intensive SMEs will be introduced.
- SME companies for which qualifying R&D expenditure constitutes at least 40% of total expenditure will be able to claim a higher payable credit rate of 14.5% for qualifying R&D expenditure.
- Update on ongoing R&D tax relief review – The government’s consultation on merging the R&D Expenditure Credit (RDEC) and SME schemes closed on 13th March. The government is currently considering the responses and no decision has been made. The government intends to keep open the option of implementing a merged scheme from April 2024.
- Delay to restrictions on overseas expenditure in R&D tax reliefs – The previously announced restriction on some overseas expenditure will now come into effect from 1st April 2024 instead of 1st April 2023. This will allow the government to consider the interaction between this restriction and the design of a potential merged R&D relief.
Summary for Individuals
Personal Allowance and Tax Thresholds
Personal allowance to remain at £12,570 per annum, the basic rate band to remain at £50,270.
Pension Tax Thresholds
- The government will increase the Annual Allowance from £40,000 to £60,000 from 6th April 2023. Individuals will continue to be able to carry forward unused Annual Allowances from the previous 3 tax years.
- The government will increase the Money Purchase Annual Allowance from £4,000 to £10,000 and the minimum Tapered Annual Allowance from £4,000 to £10,000 from 6th April 2023.
- The adjusted income threshold for the Tapered Annual Allowance will also be increased from £240,000 to £260,000 from 6th April 2023. The government will also remove the Lifetime Allowance charge from 6th April 2023, before fully abolishing the Lifetime Allowance in a future Finance Bill.
- The maximum Pension Commencement Lump Sum for those without protections will be retained at its current level of £268,275 and will be frozen thereafter.
Occupational Health provided by employers
- Consultation on occupational health tax incentives – The government will consult on options to increase investment in occupational health services by UK wide employers through the tax system.
Childcare and help with costs
- 30 hours free childcare for working parents and support for childcare providers – The government will provide to deliver 30 hours a week of free childcare for eligible working parents of children aged 9 months up to 3 years in England, where eligibility will match the existing 3 – 4-year-old 30 hours offer. This will close the gap between parental leave finishing and the current free childcare offer.
- Wraparound childcare – The government will introduce a national pathfinder scheme for wraparound childcare in England, to stimulate supply in the wraparound market and support the ambition that all children should be able to access 8am-6pm childcare provision in their local area.
- Paying Universal Credit childcare support upfront for parents moving into work and working longer hours
- The government will provide upfront support for childcare costs to parents on Universal Credit moving into work or increasing their hours in Great Britain rather than in-arrears.
- The government will increase support for those parents in Great Britain on Universal Credit who face the highest childcare costs, often because they are working longer hours, by increasing the Universal Credit childcare cost maximum amounts to £951 for one child and £1,630 for two children.
Energy Price Guarantee (EPG)
- The government will maintain the EPG across the UK at £2,500 per year for the typical household for an additional three months (April to June 2023). The planned increase to £3,000 per year will therefore be implemented on 1st July, rather than 1st April as previously announced.
Energy Bills Discount Scheme
- The Energy Bills Discount Scheme will provide all eligible businesses and other non-domestic energy users across the UK with a discount on high energy bills until 31st March 2024, following the end of the current Energy Bill Relief Scheme. It will also provide businesses in sectors with particularly high levels of energy use and trade intensity with a higher level of support.
If you need bespoke advice as a result of the Chancellor’s Spring Budget, please contact a member of the LWA team. Call 0161 905 1801 in Manchester or 01925 830 830 in Warrington, or you can email us via mail[at]lwaltd.com.