2023 Budget: A summary for business and personal finances
Earlier today, Jeremy Hunt delivered his first budget as Chancellor of the Exchequer. Amongst other goals, the announcements focussed primarily on prompting workers back into the workplace, boosting business investment, and mitigating the impact of the cost of living crisis.
Here are four key areas where policy has changed:
Planned changes to corporation tax will go ahead, with businesses now expected to pay 25% on profits over £250,000. We’ve put together a full summary on the change to the corporation tax rate.
Annual Investment Allowance (AIA): The 100% capital allowance for qualifying expenditure on plant and machinery has permanently been set to £1m, rather than reverting back to £200k.
Full Expensing (FE): With the super deduction ending in March 2023, the replacement will be 100% of the costs of items such as plant and machinery and technology deducted from a company’s profits.
The 50% first year allowance (FYA): Businesses can deduct 50% of the cost of other plant and machinery, known as special rate assets, from their profits during the year of purchase.
Companies who invest more than 40% of expenditure in research & development, may be eligible for a 27% R&D tax credit, if loss making, almost double from the previous rate (14.5%). Does your business engage in R&D? We’ve put together a full guide on accessing tax relief.
Pension Annual Allowance increased: The annual tax free allowance will increase from £40k to £60k. It is hoped that this will discourage early retirement from workers in key professions such as education and health.
Pension lifetime allowance cap: The current lifetime allowance of £1.07m will be abolished, meaning savers can keep adding to their retirement funds.
Midlife MOT: Improvements and expansion of the “Midlife MOT” tool will support individuals plan for, and save towards, their retirement.
Energy price guarantee to remain at £2,500 for a further three months. The cap was due to rise to £3,000 in April. In effect, this saves each household £160 per month.
Prepayment metres: Energy costs for prepayment meters to be brought in line with direct debit customers.
Is your business struggling with energy costs? Here are some handy tips on how to create a cheaper and more sustainable energy plan for your business.
EMI Schemes: From April 2023, to simplify the process to grant options by removing the requirement to set out details of restrictions in option agreements.
Returnerships: Fund to help over 50s getting back to work and with skills bootcamps.
Increased childcare support: 30 free hours of childcare per week will be provided to families aged 1-2, where adults in the household are working at least 16 hours per week. Furthermore, incentive payments of £600 will be provided to new childminders, and £1,200 to those who join an agency.
Other key announcements:
The Office for Budget Responsibility believes the UK will avoid recession in 2023, but the economy will shrink by 0.2%.
Inflation is predicted to fall to 2.9% by the end of this year, down from 10.7% in the last three months of 2022.
Fuel duty frozen – the 5p cut to fuel duty on petrol and diesel, due to end in April, has been kept for another year.
Pubs will receive 11p lower on duty on draft beer, as compared to supermarkets, however rates of tax on all alcohol sales will rise with inflation in August.
If you would like to discuss anything you have read or heard, please do not hesitate to contact us.