The UK’s first full budget in just under a year and a half was unveiled to the public last week, causing much surprise with the level of support announced.
There’s no hiding from the fact that the rising cost of living, inflation and effects of the pandemic are putting strain on both individuals and businesses, and the Chancellor’s Budget is aiming to relieve some of this strain.
From increased childcare funding, to energy price cap extensions, people across the UK are set to benefit more from this year’s budget. Let’s explore.
Budget Key Points
Pensions and Wages
- The current £1.07m cap on the amount workers can save in pensions throughout their lifetime before being subject to additional tax is to be abolished.
- The current tax-free allowance for pensions pot has been frozen at £40,000 for nine years but now, the allowance will rise to £60,000.
Fuel, Alcohol and Tobacco
- The 5p cut to duty on petrol and diesel was due to end in April, but this has been extended for another year.
- From August, taxes on alcohol will rise in line with inflation. However, new reliefs for beer, cider and wine sold in public houses will be offered – a move to support the hospitality industry.
- The tax on tobacco products will increase to 2% above inflation, with hand-rolling tobacco tax increasing to 6% above inflation – a move to help reduce the nation’s number of smokers, perhaps?
Energy and Power
- The limit on household energy bills to £2,500 a year has been extended to June – an additional three months.
- An investment of £200m is being made in a bid to make sure those using prepayment meters (around 4m households) to pay are subject to the same prices as those paying by direct debit.
- An investment of £63m is being laid out to support leisure centres that have rising swimming pool heating costs and helping them become more energy efficient.
Benefits and Return to Work
- From April 2024, 30 hours of free childcare per week for working parents in England will be rolled out to include children from age 1 to 4.
- Childcare support payments for those on universal credit will now be paid in advance rather than in arrears. The £646 a month cap per child will also be raised to £951.
- Those wishing to become childminders will receive a £600 “incentive payment”. Rules in England will also be relaxed rules to allow childminders to look after more children.
- An investment of £63m is being made for programmes which encourage those over 50 who have retired to return to work. This will be in the form of skills camps and ‘returnships’
- In the construction sector, immigration rules will be relaxed for five roles to help ease labour shortages.
Tax and Investments
- The main rate of Corporation Tax for taxable profits over £250,000, will increase from 19% to 25%.
- Companies that have profits between £50,000 and £250,000 will pay corporation tax at rate of between 19% and 25%.
- Investments in new machinery and technology can be deducted by businesses to help lower their taxable profits.
- 12 new Investment Zones across the UK will be funded by £80m each over the next five years which will result in tax breaks and other benefits.
We certainly welcome the support announced in the Chancellor’s March 2023 Budget. Whilst there is a notable rise in Corporation Tax and Income Tax which could add further pressure to businesses, there were some significant benefits announced which could outweigh this. For example, in the construction sector particularly, the rules have been relaxed around immigration for certain roles, thus reducing the investment in recruitment strategies and short term labour and increasing production.
Furthermore, the expensing policy for capital allowances will encourage businesses to invest in equipment that can aid efficiency – we certainly will be supporting clients with the best way to do this whilst remaining compliant.
Lastly, we believe exciting things are on the horizon given one of the 12 new investment zones will be in West Yorkshire. This investment zone will be backed by £80m over five years particularly to aid the introduction of tax reliefs, training and infrastructure. The idea is that these measures will help to level up West Yorkshire, thus creating a more evenly distributed growth for the UK economy.
Need a helping hand navigating the changes? Reach out to us at firstname.lastname@example.org.