Spring Statement 2023 - The Highlights

5 hours, 7 minutes ago by Oliver Atkinson

The Chancellor Jeremy Hunt delivered his budget for the forthcoming 2023/24 tax year to Parliament on Wednesday, confirming some information that was already presented previously in the Autumn budget U-Turn, as well as introducing several new schemes and adjustments to allowances.

Personal Tax & Allowances

As previously announced, the major change to personal tax for the 2023-24 tax year will be the revision of the 45p higher rate-threshold. This will drop to an annual amount of £125,140 from the 6th of April, down from its current level of £150,000.

Another personal tax adjustment was introduced during the statement, which is the increase of the annual tax-free pension contribution allowance from it’s current £40,000 per year to an amount of £60,000 per year. This is combined with the removal of the pension lifetime allowance charge, and a planned abolishment of the allowance in a future budget as part of a package to attract early retirees back to work.

Living Wage & Employment

There was little new information for employers following on from the numerous changes we had in 2022. However, the planned increase in the living wage will go ahead as follows:

• 23 and over – from £9.50 per hour to £10.42 per hour
• 21 to 22 – from £9.18 per hour to £10.18 per hour
• 18 to 20 – from £6.83 per hour to £7.49 per hour
• Under 18s and Apprentices – from £4.81 per hour to £5.28 per hour

Corporation Tax

The planned rise in Corporation Tax will go ahead, with the new rate of 25% in effect from the 1st of April 2023. The government estimates that only around 10% of businesses will pay the full 25% rate, with the majority of companies receiving some relief on their profits below £250,000 and the 19% rate still applying to businesses with taxable profits of £50,000 or less.

With the super-deduction scheme coming to a close on the 31st of March 2023, a new offer to businesses will be available from 1st of April 2023 to 31st March 2026 called ‘full expensing’. This programme will allow companies to claim 100% first year relief on qualifying main rate plant & machinery assets. Full details of the scheme have been published here.

The previous extension to AIA for SMEs and sole traders will now be made permanent, remaining at £1,000,000 per year for the foreseeable future. This had initially been a temporary extension of the normal £200,000 limit. This permanent extension to AIA is coupled with another temporary extension to the 50% first-year allowance for special rate assets, initially due to end on 31st March 2023, will now be extended to 31st March 2026.

A new R&D tax credit scheme for SMEs is to be introduced from the 1st of April. To be eligible, the company must be spending at least 40% of its turnover on research and development, and qualifying businesses will be able to claim a credit of £27 from the government for every £100 spent on R&D.

Other measures & items

• The Energy Price Guarantee will be extended at it’s current rate for another 3 months until June 2023.
• This means that the cap on household energy bills will remain at £2,500 per annum until June when it will be reviewed again.
• Fuel duty has been frozen again at it’s current rate.
• Alcohol duty has also been frozen again but only until the 1st August 2023, where it will rise with inflation. Pubs and other businesses using draught products will however get a duty cut of 11p.
• Nuclear Power has been reclassified to environmentally sustainable, with the government to look to
• build new plants.
• The disability work capability assessment is to be scrapped. The government’s white paper on this can be found here.
• The maximum sentence for tax fraud has been doubled from 7 years to 14 years.

The promotion of Tax Avoidance schemes will be criminalised after consultation. Businesses promoting
such schemes that fail to comply with a notice from HMRC to cease will be subject to punitive measures, including disqualification of directors.

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