The Chancellor, Jeremy Hunt, announced his Spring Budget as a “Budget for Growth” on Wednesday 15 March, setting out the Government’s tax and spending plans, accompanied by a forecast from the OBR.
This Spring Budget 2023 was an opportunity for the Chancellor to provide an update on the economic progress made from policies set out in the Autumn 2022 Statement, and to announce new tax measures and spending plans.
Overview
Most tax rates and allowances were announced in advance at the Autumn Statement, so the Budget focused more on spending than on tax
Personal tax
The main personal tax-free allowance and the 40% tax rate threshold remain frozen at their 2022/23 levels until the end of 2027/28, representing a tax rise where income increases
The 45% threshold is lowered from £150,000 to £125,140 for 2023/24
Tax-free dividend allowance falls from £2,000 to £1,000, and Capital Gains Tax annual exempt amount falls from £12,300 to £6,000, for 2023/24
Pension savings thresholds significantly increased: from 6 April 2023, Annual Allowance rises from £40,000 to £60,000 (with related changes to tapering) and Lifetime Allowance Charge is abolished; maximum tax-free lump sum remains 25% of former Lifetime Allowance, i.e. £268,275
ISA investment limit remains £20,000
Increase in limit for shares that can be granted under Company Share Ownership Plans confirmed at £60,000
Small Enterprise Investment Scheme limits increased from 6 April 2023 – maximum for investor is doubled to £200,000
Inheritance Tax thresholds and rates unchanged to the end of 2027/28
Business tax
Confirmation of corporation tax rate increase from 19% to 25% from 1 April 2023 for profits over £250,000
‘Super-deduction’ for plant and machinery bought up to 31 March 2023 replaced by 100% first-year allowance (“full expensing”) for qualifying capital expenditure, without upper limit, for three years from 1 April 2023
Confirmation of previously-announced changes to Research & Development tax reliefs from 1 April 2023, comprising changes to the rates of relief under the RDEC and SME regimes and measures to improve compliance. A new measure in the Budget softens the impact of the reduced rate of relief for R&D intensive, loss-making SMEs, for whom the repayable credit rate will remain at 14.5% (albeit based upon the new lower enhanced deduction of 86%)
Reforms to audio-visual tax reliefs from 1 April 2024
Announcement of 12 ‘Investment Zones’ to be established throughout UK with incentives for investment and employment
Other measures
Energy Price Guarantee retained at £2,500 for average household for another 3 months to 1 July 2023
Significant expansion of free childcare provision to be phased in from April 2024
Fuel duty frozen, and temporary 5p reduction retained, for another year
Introduction of ‘Returnerships’ – similar to apprenticeships – to encourage over-50s back into work
Our team of tax specialists shared their insights and understanding of the key Budget changes from the Spring Statement by the Chancellor, Jeremy Hunt, in the context of other developments and how this could impact on you and your UK business. You can view the webinar at
www.larking-gowen.co.uk/insights/webinar-spring-budget-2023-review/.
Need help?
If you’d like to discuss this in more detail, please get in touch with your usual Larking Gowen contact. You can find contact details in the Our People section of our website. Alternatively, call 0330 024 0888 or email enquiry@larking-gowen.co.uk.
Sally Farrow
Private Client Tax Partner
This article is designed for the information of readers. Whilst every effort is made to ensure accuracy, information contained in this article may not be comprehensive and recipients should not act upon it without seeking professional advice. “Larking Gowen” is the trading name of Larking Gowen LLP, which is a limited liability partnership registered in England and Wales (LLP number OC419486). Where we use the word partner it refers to a member of Larking Gowen LLP. ©Larking Gowen.
