Jeremy Hunt has announced his second fiscal statement and first Budget since becoming Chancellor against a backdrop of fragile public finances, an ongoing cost of living crisis, and increased Government borrowing. But how does his Budget stack up against the Government’s priorities – and what does it mean for people and businesses across the UK?
Within this mailout we will highlight the most important updates to the Spring Budget announced yesterday. A detailed breakdown and downloadable PDF is provided below. If any of the information within this article affects you or your business, please get in touch by calling 01454 619900 or emailing email@example.com.
As previously announced, the corporation tax rate will increase from 19% to 25% in April 2023 but with marginal relief for businesses with profits between £50,000 and £250,000. According to Hunt, only 10% of companies will pay the 25% rate, and the UK has the lowest rate of corporation tax in the G7.
With the annual super-deduction due to end before the start of the new tax year, the Chancellor has announced that the Government will introduce a “full expensing” scheme to encourage companies to invest in plant, machinery and technology. From 1 April 2023 until 31 March 2026, companies across the country will be able to claim back 100% of their qualifying costs. For the next three years, the Government says 99% of companies will be able to immediately reclaim every pound invested.
The Chancellor also said the Government plans to make this measure permanent (if the economy allows) post-2026, adding that the policy will make the UK’s capital allowance regime “the joint most generous” of any advanced economy. He said: “If the super-deduction was allowed to end without a replacement, we would have fallen down the international league tables for tax competitiveness and damaged growth. I could not allow that to happen.”
In the run-up to the Budget, many speculated that Hunt would increase the pensions lifetime allowance (LTA) to allow people to increase the amount they receive in retirement. Instead, he scrapped the limit altogether, claiming this would incentivise over-50s to work for longer.
The LTA is the total amount you can put in your private pension pot before tax. The cap was due to stay at £1,073,100 until 2026, but workers will now be able to make unlimited pension contributions during their lifetime.
Meanwhile, the annual allowance – the maximum tax-free amount people can pay into private pensions per year – will rise by 50% from £40,000 to £60,000. According to the British Medical Association, the current LTA rate is “punitive”, and encourages senior doctors to leave the NHS.
Hunt hopes that abolishing the LTA and raising the annual allowance will address doctors’ concerns, as well as encourage older workers across the UK to return to the workforce.