In today’s Spring Budget, Chancellor Jeremy Hunt ‘aimed at achieving long-term, sustainable economic growth’ with a plan to ‘halve inflation, grow the economy and get debt falling’.
The priorities were linked to four Es: Employment (boosting labour supply), Education (providing skills and support), Everywhere (ensuring UK-wide growth) and Enterprise (with reference to a “pro-business tax regime”).
Key announcements for people included:
Pension tax
From April 2023:
- The Lifetime Allowance (LTA) charge will be removed
- The Annual Allowance will increase to £60,000
- The Tapered Annual Allowance will increase to £10,000
From April 2024, the LTA will be abolished.
Qualifying care relief
The income threshold at which qualifying carers begin paying tax on care income will increase to £18,140 per year plus £375-450 per person cared for per week for 2023/24. These levels will then be index-linked.
Fuel duty
The planned increase of 11p in fuel duty this year will be cancelled. For the next 12 months, rates will be kept the same.
Trusts and estates
An existing income tax concession for low-income trusts and estates will be extended. Further changes will simplify calculations and reporting. HMRC also intend to remove non-taxpaying trusts from reporting requirements by modifying inheritance tax regulations.
Key announcements for businesses included:
Capital allowances: full expensing
Companies incurring qualifying expenditure on the provision of new plant and machinery on or after 1 April 2023 but before 1 April 2026 will be able to claim one of two temporary first-year allowances:
- A 100% first-year allowance for main rate expenditure (full expensing)
- A 50% first-year allowance for special rate expenditure
R&D tax relief
From 1 April 2023, there will be an increased rate of relief for loss-making R&D intensive SMEs. Eligible companies will receive £27 from HMRC for every £100 of R&D investment.
A company is considered R&D intensive where its qualifying R&D expenditure is 40% or more of its total expenditure.
Previously announced restrictions on some overseas expenditure will now come into effect from 1 April 2024 instead of 1 April 2023.
Cultural tax reliefs
The higher rates of the theatre, orchestra and museums and galleries tax reliefs will be extended for two years.
Creative tax reliefs
From 1 April 2024:
- A new Audio-Visual Expenditure Credit will replace the current film, high-end TV, animation and children’s TV tax reliefs
- A new Video Games Expenditure Credit will be introduced
As part of efforts to tackle tax avoidance, other announcements included:
- A further £47.2m investment to support HMRC’s capability to collect tax debts
- Legislation to close an avoidance loophole that can leave HMRC out of time to assess tax due on capital gains when an asset is disposed of under an unconditional contract
- From the 2024/25 tax year, changes to the self-assessment tax return forms requiring amounts in respect of cryptoassets to be identified separately
Look out for more Spring Budget information and analysis from us, including a video from our tax team exploring what the changes will mean for people and businesses.
In the meantime, to discuss any of the announcements, please get in touch with your usual BKL contact or use our enquiry form.
Our Spring Budget 2023 coverage also includes:
