In his Spring announcement, Chancellor Jeremy Hunt unveiled what he called a ‘Budget for Growth’, with headline takeaways in the form of an increase in funding for childcare, keeping the energy price cap, and pensions and benefits overhauls.
Some reassurance of falling inflation and economic stability was offered to businesses up front, with the surprise projection that the Office for Budget Responsibility predicts that inflation will fall to 2.9 per cent by the end of this year and the avoidance of a technical recession.
Despite confirming that corporation tax rate hikes will go ahead in April to aide post-Pandemic recovery, the Chancellor has introduced measures for both capital intensive and capital light businesses that should alleviate that burden and encourage investment in UK business - in an effort to bolster long-term economic growth.
Additionally, the ability to rapidly expense qualifying capital expenditure against taxable profits and access to enhanced tax reliefs for R&D intensive and creative industries make the rate change much more palatable. After all, the headline rate is just a rate, it’s what that rate applies to that really drives the tax liability.
The Chancellor, who has previously declared his ambition for the UK to become a "science and technology superpower", set out a vision of the UK as a world leader in some of the industries of the future; AI, Life Sciences, Green Industry, Creative Industries and Quantum Computing. We expect consultation ahead of the Autumn Statement on opening pools of capital for investment whether from pension funds or through lighter regulation opening opportunities easier access to capital markets. We have repeatedly called for making it easier for UK innovative companies to access capital for both start up and scale up and so all of this will be welcomed by businesses.
Importantly, industries need people and, in addition to the expected relaxations to the current pension regime to allow many older workers to remain or return to the workforce, there was also a surprise decision to scrap the £1m cap on tax-free pension savings. For those who do return, the possibility of redirecting their experience and skills to new industries through ‘Returnerships’ is intriguing. Additionally, for the wider workforce, improved access to childcare and decoupling some benefits from employments open up the ability to work and be rewarded rather than penalised for that work.
Overall, the Chancellor’s measures propose to tackle “the two biggest barriers that stop businesses growing” - investment incentives, and labour supply, as well as supporting the UK in a return to sustainable growth in a relatively benign inflationary environment in the next few years following the fallout from the mini-Budget in September. Although, it’s fair to say that announcements were in danger of being overshadowed by the publicised problems in some European banks.
Webinar: Unpacking the Spring Budget 2023
We held our Spring Budget webinar on Friday 17 March where we unpacked the Chancellor’s announcements and analysed what they mean for businesses and individuals. If you missed it, watch here.
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The Chancellor had previously stated he would like to cut taxes when public finances allow. That time is clearly not now but the Jeremy Hunt did announce some significant relaxations to pension savings in an attempt to keep more people working for longer. Beyond that, there were no significant personal tax cuts which are likely to be saved for closer to the general election.
Whilst a reversal of the increase in the rate of corporation tax from 19% to 25% from 1 April 2023 for companies was not anticipated and did not take place, a new generous capital allowance policy has been introduced. This will take the edge off the pain for capital intensive corporate entities for the next few years whilst the pinch from the cost-of-living crisis is felt.
Chancellor Jeremy Hunt delivered his first full Budget statement, and this was much more in keeping with what we expect from a fiscal statement after the infamous Mini Budget and Autumn Statement of 2022.
The Chancellor made numerous references to the role that innovative businesses will play in creating economic wealth for the country, through the development of technologies, products and services which will advance living standards.
While there was no direct mention of migration in the Spring Budget there are some upcoming changes that play into the Government’s objective to ensure that employers have access to the skills and experience they require.
As the economy loses steam, overall we consider the measures announced by the Chancellor should improve demand by lowering individual tax burdens, increasing spending in defence and other areas and allowing more tax benefits for certain sectors and employees. The latter could possibly reduce the skills gap in the UK. Targeted investments in areas outside of London are also very positive towards...
There was a lot of talk and pressure about reforming apprenticeship funding (particularly in retail and hospitality to boost recruitment and skills) before the Spring Budget. However, the Speech revealed no real movement on this issue. The apprenticeship scheme remains as is, but with a few tweaks to encourage those aged over 50 to participate in Returnerships.
The expected changes to the Company Share Option Plan (“CSOP”) were confirmed in the Spring Budget – an increase in the limits from £30,000 to £60,000 and the removal of restrictions on the type of shares that can be used from 6 April 2023. This will increase the flexibility and attractiveness of a CSOP for companies who do not qualify for an Enterprise Management Incentive (“EMI”) Plan.
The Chancellor announced today in his Spring Budget a number of measures to support the Prime Ministers economic growth plans. For local government more details on levelling-up and the devolution deals will be welcome. The promise of multi-year funding settlements will have a big impact on local government’s ability to prioritise local needs but, partnerships between local universities,...
Clearly, Jeremy Hunt was wanting to champion the importance of the life sciences sector to the UK’s economy. It was probably singled out more times in his speech than any other sector and a few of the reforms announced today go some way to address criticism around the competitiveness of the UK corporation tax system for this sector, particularly in advance of the rise of the headline rate to...
There was much in the Chancellor’s Budget to encourage individuals back into the workplace, be that retirees wanting to return to work, those with disabilities or childcare responsibilities, and potential apprentices. These measures should ultimately benefit the Consumer sector, both as a large source of employment and as a means to boost disposable income available for consumer spending by...
Whilst many of the measures announced during the Spring Budget will be welcomed by businesses across all sectors, those within the automotive sector may feel disappointed it stops short of including any real investment to support the strengthening of the UKs Electric Vehicle (“EV”) sector and charging infrastructure.
In his Budget announcement, the Chancellor aimed to get Britain’s businesses spending and investing in capital projects. With the backdrop of continuing concerns over the country’s energy security he announced a number of new infrastructure initiatives for the energy sector. The specific measures, in of themselves, are potentially limited in the short term and do little to incentivise the...
The measures announced by Chancellor Jeremy Hunt in the latest Spring Budget are aimed at encouraging investment in the UK, increasing labour market activity and fostering innovation and creativity in the UK.