What Was Announced in the Spring Budget?

Mar 20, 2023

In his inaugural Spring Budget speech on March 15, Chancellor Jeremy Hunt set out several measures to promote economic growth.

So what did the Chancellor announce in the Spring Budget? We’ll explain all of the major changes coming up over the next few months.

Pension allowance

Hunt declared that the Government is scrapping the lifetime allowance (LTA) for pension contributions, meaning workers can save as much as they wish rather than the capped £1,073,000.

The Chancellor also raised the pensions annual tax-free allowance by 50% from £40,000 to £60,000.

The Chancellor said:

“It’s a pension tax reform that will stop over 80% of NHS doctors from receiving a tax change, incentivise our most experienced and productive workers to stay in work for longer and simplify our tax system.”

Corporation tax

As planned, the corporation tax rate will increase from 19% to 25% from the start of the new tax year, which the Chancellor says will only affect 10% of companies in the UK.

The upcoming corporation tax rates are:

  • 19% on profits up to £50,000
  • 25% on profits between £50,000 – £250,000 (but with marginal relief)
  • 25% on profits over £250,000.

Full expensing allowances

Now that the super-deduction has ended, Hunt will replace the capital allowance scheme with ‘full expensing’ to encourage companies to invest in plant, machinery and technology.

From 1 April 2023 to 31 March 2026, companies can claim back 100% of qualifying costs in full and immediately from their taxable profits. The Chancellor said that he hopes to make full expensing permanent, but it depends on the state of the economy come 2026.

Research and development

The Chancellor then announced a new R&D policy for loss-making, ‘R&D-intensive’ SMEs that spend at least 40% of their total expenditure on R&D.

These SMEs can claim the original, higher payable credit rate of 14.5% rather than the reduced 10% proposed in the Autumn Budget in 2022.

This means the R&D-intensive SMEs can claim £27 for every £100 they spend.

Investment zones

Not only will the Government offer reliefs for capital purchases, but it will also be providing up to £80 million in grants for eligible investment zones across the UK.

Of the twelve zones, eight proposed areas will spread across England and at least three of the other four split between Scotland, Wales and Northern Ireland.

Local authorities will be able to use the grant to help with business rates, invest in infrastructure, create jobs and even use it as tax relief.

Energy support

As energy bills are still causing a heavy impact on homeowners nationwide, the Government will extend the energy price guarantee for an extra three months.

The change means the average household’s energy bill will be capped at £2,500 a year.

Need advice?

With all of the recent tax changes, and more on the nearing horizon, it makes sense to stay ahead of the curve.

If you’re unsure how the recent Spring Budget will affect you, we’re always happy to talk you through the direct impacts.

Get in touch to discuss your taxes.

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