2023 Spring Budget – key points

The Chancellor, Jeremy Hunt has announced the 2023 budget. The UK will now not enter a technical recession this year the independent Office for Budget Responsibility (OBR) has said. Inflation will also more than halve and reduce to 2.9% by the end of the year. This article will outline the key points made in this year’s budget with a detailed PDF download to follow.

Childcare

Parents of children aged nine months to five years and who are working more than 16 hours a week, will get 15 hours free childcare to encourage caregivers to enter the workforce.

This will be staggered from April 2024 to ensure that there are enough places. Children up to two years old will get 15 hours free from April 2024, children from nine months up will benefit from September 2024 and from September 2025, parents of all children under five will have access to 30 hours free childcare per week.

Pension

The lifetime allowance (the total amount workers can accumulate in their pension savings before paying extra tax) has been abolished. Mr Hunt hopes it will stop 80% of NHS doctors from receiving a tax charge.

Alcohol duty

A reduction in duty of 11p has been announced on draft drinks served in pubs from 1 August, meaning a pint will be cheaper than in supermarkets.

Fuel duty

The 5p cut in fuel duty has been extended for a year.  Fuel duty will also be frozen for the next twelve months.

Benefits

The government will abolish the work capability assessment for disabled people and separate benefit entitlement from an individual's ability to work. The aim is to enable disabled people to seek work without fear of losing their benefits.

Business support

Businesses will be able to offset 100% of expenditure on assets against their profits to bring down tax bills. The OBR said it will increase business investment by 3% for every year. Mr Hunt said that the measure will last for 3 years but intends to make it permanent "as soon as we can responsibly do so".

An "enhanced credit" has been introduced for small and medium-sized businesses if they spend 40% or more of their total expenditure on research and development. They will be able to claim credit worth £27 for every £100 spent.

Energy bills

The government is extending the energy price guarantee (EPG) which keeps the average household bill at £2,500, until the end of June. The typical bill was due to rise to £3,000 from 1 April. Under the EPG, the government effectively caps household costs and reimburses energy companies for the difference between that and the cost of buying power on wholesale markets.

The energy rebate scheme paid direct to customers in six instalments of £66 and £67 a month has not been extended and will end this month.

The "prepayment premium" whereby those using prepayment meters are charged more for their gas and electricity will be scrapped from July.

Defence

Defence spending will rise to £11bn over the next five years.

If you have any questions or queries regarding this year’s budget please get in touch with your Swindells partner who will be able to advise you further.