In the 2023 budget announced today, 15 March 2023, The Chancellor of the Exchequer, Jeremy Hunt, presented a number of measures in his “back to work” Budget, this was alongside a full report by the OBR – which is now forecasting there will be no recession.
In his speech, the chancellor said: “In the face of unprecedented global headwinds, families, pensioners, businesses, teachers, nurses and many others are worried about the future. So today we deliver a plan to tackle the cost of living crisis and rebuild our economy. Our priorities are stability, growth and public services.” He added that the announcement included some “difficult decisions”.
The following content is accurate as of 15.03.2023.
Fuel duty freeze
A freeze on fuel duty and the 5p reduction will remain in place for 12 months.
New R&D tax credit
Small and medium-sized businesses that spend 40% of their total expenditure on research and development will be able to claim a credit worth £27 for every £100 they spend. ‘Total expenditure’ will be defined as the expenditure in the profit and loss account, plus any amount included in the R&D claim by virtue of S1308 CTA 2009, less any non-deductible expenditure.
Super deduction replacement
Full expensing for investment in qualifying expenditure on new plant and machinery has been introduced, as a replacement for the super deduction, set to end on 31 March 2023. This is a huge boost for companies seeking to invest in new IT, plant and equipment. The measure is set to be in place for three years with the intention of making it a permanent feature of the capital allowances investment incentives regime when finances will allow. Details:
- Full expensing is only available to companies that incur expenditure on new so-called main pool plant and machinery.
- Expenditure must be incurred after 1 April 2023 and before 1 April 2026.
- Plant and machinery must be new and unused (it does not include cars, given to the company as a gift, or bought to lease to someone else) – expenditure on second-hand assets and those bought to lease to someone else can still qualify for the AIA.
- For “special rate” expenditure, which doesn’t qualify for full expensing, a 50% first-year allowance can be claimed instead, subject to the same conditions that apply for full expensing.
Small business investment allowance increase
Every pound invested in IT equipment, plant or machinery will be immediately deductible from taxable profits. This measure is worth £9 billion for each year that it’s in place.
Pension tax reform
The Annual Allowance (AA) is the amount by which an individual’s pension pot can increase in a year without triggering a tax charge at the marginal tax rate. The standard AA has been raised by 50%, from £40,000 to £60,000 from 6 April 2023. The ability to carry forward unutilised AA for three years will remain.
The Chancellor has also abolished the Lifetime Allowance Charge with effect from 6 April 2023, enabling individuals to benefit from substantially larger pension savings without a 55% tax charge. The Lifetime Allowance itself will be abolished in a future Finance Bill.
Business rates are reviewed
The government plans to make the system fairer by moving to three-yearly revaluations from 2023.
The initial business rates review proposed a new obligation for ratepayers to notify the VOA within 30 days of changes that affect their rateable value, such as changes in rent or occupancy or alterations to the property. This requirement has been extended to 60 days.
Investment zones are announced
It is hoped that the 12 new Investment Zones announced in the Budget will stimulate economic investment activity in the UK. There will be eight zones in England in the following areas:
- East Midlands
- Greater Manchester
- North East
- South Yorkshire
- Tees Valley
- West Midlands
- West Yorkshire
At least one further zone will be available in each of the devolved administrations and the Department for Levelling Up Housing and Communities (DLUHC) is working closely with them to establish how Investment Zones in Scotland, Wales and Northern Ireland will be delivered.