Spring Budget 2023 - Summary and Headlines

Chancellor Jeremy Hunt has delivered a ‘Budget for Growth’ after the Office for Budget Responsibility forecast a stronger than expected performance from the UK economy this year with inflation continuing to fall.

The key points of note have been included below, for more detailed information please download our Budget Summary which explains the changes in more detail and how they will have an impact upon you, your business and your personal finances.

What do the Headlines mean for you as a Business?
Capital Allowances

• For unincorporated businesses the Annual Investment Allowance (AIA) has been confirmed to provide relief for plant and machinery investments of up to £1m.
• The 50% first year allowance (FYA) for expenditure by companies on new special rate assets has been confirmed until 31 March 2026.
• Maintaining these allowances will continue to encourage spending for smaller businesses.

The new full expensing regime

• This has been brought in for an initial three years to replace the super-deduction scheme which ends on 31st March 2023.
• This means that 99% of all businesses can deduct the full value of their investment from that year’s taxable profits.
• For each pound that a company invests in IT equipment, plant or machinery this cost can be deducted in full and immediately from taxable profits.
• For a company paying Corporation Tax at 25%, the relief for each pound spent will be on a par with that previously available as a super deduction at the lower Corporation Tax rate.

Enhanced R&D relief

• If a qualifying small or medium-sized business spends 40% or more of their total expenditure on R&D they will be able to claim a credit worth £27 for every £100 they spend.
• R&D tax relief for large companies (RDEC) will increase from 13% to 20% from 1st April 2023.
• The increase of credit will only apply to companies where their qualifying R&D spend is more than 40% of their total expenditure.

Pensions

• The Lifetime allowance on tax-free pension contributions is currently £1.07m, with effect from 1st April this cap is to be abolished.
• This is a huge development which is designed to encourage the skilled over 50’s back into the workplace.
• The annual tax free allowance has been raised from £40,000 to £60,000.
• Another welcome increase allowing more tax efficient pensions savings to be made.  The tapering mechanism for higher earners remains unchanged.

Corporation tax

• Main rate of corporation tax, paid by businesses on taxable profits over £250,000 confirmed to increase from 19% to 25%.
• Companies with profits between £50,000 and £250,000 to pay between 19% and 25%.
• The changes announced in November 2022, remain in force and will come into effect on 1st April 2023.

Reform of Company Share Option Plan (CSOP)

• Qualifying companies will be able to issue up to £60,000 of CSOP options to employees, double the current £30,000 limit. The changes will take effect from 6 April 2023.
• The increase in the limit will allow employers to offer more incentives to retain their key employees.

Expansion of the Seed Enterprise Investment Scheme (SEIS)

• The amount of investment that companies will be able to raise under the SEIS will increase from £150,000 to £250,000.
• Also, the gross asset limit will be increased from £200,000 to £350,000 and the age limit on a qualifying trade from 2 to 3 years.
• The annual investor limit will also be doubled to £200,000.
• The changes will take effect from 6 April 2023.
• This will enable companies seeking investment to raise more funds over a longer period of time allowing them to plan ahead in terms of growth strategy.

What do the Headlines mean for your Household?
Energy Price Guarantee

• This Government subsidy which limits typical household bills to £2,500 has been extended for the next three months.
• This measure is designed to save families a further £160 on top of the energy support measures announced.

Childcare

• Up to 30 hours of free childcare for working parents in England to be rolled out in stages from April 2024.
• This provision now includes a broader age range – extending to cover one and two year olds.

​​​​​​​​​​​​​​Fuel duty

• The 5p cut to fuel duty on petrol and diesel will be kept for another year.
• The 5p cut was originally due to end in April this year, the extension will provide savings to many.