Spring Budget 2023: Our Reaction
Our tax team gives their initial reaction to the Spring Budget 2023 which the Chancellor, Jeremy Hunt, presented to parliament earlier today.
THE KEY POINTS
With high inflation being felt throughout the UK economy/population the Chancellor is predicting no technical recession this year with inflation predicted to fall to 2.9% close to the longstanding 2% target rate.
The corporate tax rise to 25% is still proceeding in April 2023, but full ‘capital expensing’ is being introduced, where a company acquires, say, IT equipment, plant and machinery, it can get an immediate corporate tax deduction for this. Businesses operating via Sole traders, Partnerships and LLPs will not be included in these rules but the £1million Annual Investment Allowance will become permanent from 1 April (when it was due to end).
Tax reliefs for research and development (R&D) and the creative industries (TV, film, video games) are becoming more generous. But much more in the coming years in relation to rationalisation and reforms, albeit a clear focus for growth and financial help by the current government.
There were big changes to pensions rules – from 6 April 2023 the pension Annual Allowance is rising from £40,000 to £60,000 and the minimum Tapered Annual Allowance is rising from £4,000 to £10,000. The adjusted income threshold for the Tapered Annual Allowance will also be increased from £240,000 to £260,000 and in a surprise move the Lifetime Allowance is being abolished completely.
The Government will restrict the scope of agricultural property relief (APR) from inheritance tax to property situated in the UK from 6 April 2024.
Granting options under the Enterprise Management Incentives (EMI) scheme is being simplified – a signed a working time declaration is no longer required and from April 2024, the deadline to notify HMRC is increased from 92 days following grant, to the 6 July following the end of the tax year.
The maximum sentences for the most egregious forms of tax fraud are being increased from 7 to 14 years.
A package of reforms to incentivise new parents to return to the UK workforce with a headline of 30 hours of free childcare for children of working parents aged nine months and over from 2025 (though not available for those earning over £100,000).
For further information about the changes announced in the Spring Budget 2023, please contact Steve Wren or Kieron Clement-Smith.
Today’s Budget was surprisingly surprising - the abolishment of the pension lifetime allowance was completely unexpected, and an extension of certain R&D and creative industry reliefs will be welcomed by many clients in those industries.
Steve Wren | Tax Partner
