Jeremy Hunt’s “back to work” Budget included announcements on increasing the annual allowance for pension contributions, abolishing the lifetime allowance for all and a new capital allowance relief, plus forecasts show the UK will avoid a technical recession. The Chancellor focussed on two key areas:
- Motivating people to return to the workplace
- Boosting investment in business
Here’s a handy summary of how today’s announcement impacts businesses and individuals:
Taxation
- Corporation Tax to increase from 19% to 25% for businesses with taxable profits over £250,000. Businesses with profits between £50,000 and £250,000 to pay between 19% and 25%. No change for businesses making profits of less than £50,000.
- Tax-free yearly allowance for pension pot to rise by 50% – from £40,000 to £60,000 – having been frozen for nine years. In addition, the cap on the amount workers can accumulate in pensions savings over their lifetime before having to pay extra tax (currently £1.07m) is to be abolished.
- Businesses can deduct investment in new machinery and technology to lower taxable profits. The super-deduction has been replaced with full expensing.
- Fuel duty frozen – the 5p cut to fuel duty on petrol and diesel, due to end in April, kept for another year.
- Alcohol taxes to rise in line with inflation from August (with new reliefs for beer, cider and wine sold in pubs). Tax on tobacco to increase by 2% above inflation, and 6% above inflation for hand-rolling tobacco.
Back to Work
- 30 hours of free childcare for working parents in England expanded to cover one and two-year-olds, to be rolled out in stages from April 2024.
- £600 “incentive payments” for those becoming childminders, and relaxed rules in England to let childminders look after more children.
- New fitness-to-work testing regime to qualify for health-related benefits.
- New voluntary employment scheme for disabled people in England and Wales, called Universal Support.
- Tougher requirements to look for work and increased job support for lead child carers on universal credit.
- £63m for programmes to encourage retirees over 50 back to work, “returnerships” and skills boot camps.
- Immigration rules to be relaxed for five roles in the construction sector, to ease labour shortages.
Energy
- Energy support for households has been extended for three months until the end of June.
- No changes were announced to the Energy Bills Discount Scheme for businesses, which will run from 1 April 2023 to 31 March 2024.
Sector-Based Support
- Streamlined approvals process promised for new medical products.
- £900m for new super computer facility, to help UK’s AI industry.
- Commitment to raise defence spending by £11bn over the next five years.
“The measures announced today impact most of us as pensions, childcare, energy bills and fuel duty are all involved,” says Emily Bridges of re:accounts Charted Accountants in Stevenage. “For businesses, the pension and investment opportunities in today’s Budget will offer tax efficiencies. I hope that the steps taken towards encouraging people back to work will help reintroduce valuable skills to the workplace.”
How does today’s budget affect you?
Would you value business advice based on your numbers, goals and tax requirements?
If you have any queries, please contact the friendly team at re:accounts. We’re happy to answer queries and offer advice. Let’s talk.
