In his inaugural Spring Budget speech, Chancellor Jeremy Hunt addressed the House of Commons on March 15 2023.
After a tumultuous few months in Parliament, the Chancellor set his sights on economic growth.
Already dispelling any rumours of tax cuts, Hunt set out his plan to get the UK back on track.
You may ask: what do these changes mean for me? We’ve covered the most important announcements and their effect on your finances.
The corporation tax rate will increase as planned from 1 April 2023.
While smaller companies with profits under £50,000 will continue to pay the 19% corporation tax rate, companies making £250,000 or more will need to pay a new 25% rate.
Companies making between £50,000 and £250,000 will also pay this new rate, with marginal relief reducing their bill proportionately.
Pension lifetime and annual allowances
In the runup to the Budget, many commentators had speculated that Hunt would increase the lifetime allowance (LTA) from its frozen £1,073,000 threshold.
Rather than raising the LTA, he scrapped it altogether, hoping this would encourage people — especially doctors — to continue working and not retire early.
The annual pension saving allowance will also rise from £40,000 to £60,000, meaning that savers can save an extra £20,000 a year before paying tax on their contributions.
From 1 April 2023 until 31 March 2026, a “full expensing” scheme will replace the annual super-deduction to encourage businesses to invest in plant, machinery and technology.
Companies can deduct 100% of the cost of all qualifying assets from their taxable profits. — an equivalent tax saving of up to 25p for every £1 spent.
Hunt said there are plans to make full expensing permanent, depending on the state of the economy in 2026.
Research & Development
Hunt also introduced a more generous R&D scheme for loss-making SMEs.
R&D-intensive companies that spend more than 40% of their total expenditure on R&D activities, will now be able to claim a higher credit rate of 14.5% — instead of the standard 10% rate — as was possible before Hunt’s fiscal statement in November last year.
This means any R&D-intensive loss-making companies can claim £27 for every £100 they spend.
As part of a plan to encourage economic growth in the UK, 12 new investment zones focusing on key sectors, such as technology and creative industries, will receive up to £80 million worth of Government support over five years.
The funding will allow eligible applicants to pay for infrastructure, maintain business rates or even use it as tax relief.
We can help
If you’re unsure what all of these upcoming changes mean for you and your business, we’re happy to talk them through with you.
Although you may not be adversely affected, it’s still in your best interest to have a full understanding of the Chancellor’s Budget.
Get in touch to discuss your taxes.