Mar 15, 2023
On 15 March 2023 Chancellor Jeremy Hunt delivered his Spring Budget speech. It is Hunt’s first Spring Budget and second fiscal statement since becoming Chancellor of the Exchequer in 2022. So, what does this year’s Spring Budget mean for UK businesses?
Planned corporation tax rise to go ahead
Business energy price cap to go ahead
Fuel Duty cut to be extended
Tax on pensions to change
Support to reduce childcare costs
The amount of tax businesses pay will rise next month. The planned corporation tax rise – from 19% to 25% – is going ahead, as planned, in April. The rise was scrapped in Kwasi Kwarteng’s September 2022 mini-budget, before being reinstated shortly after.
The Energy Bill Relief Scheme will end on 31 March as planned and will be replaced by the Energy Bills Discount Scheme. Businesses will receive a discount on gas and electricity wholesale prices, as opposed to a fixed price. The Energy Bills Discount Scheme is set to run until 31 March 2024.
In last year’s Spring Budget the then Chancellor of the Exchequer Rishi Sunak announced a temporary 5p per litre cut on fuel.
This was due to expire this month to bring fuel prices in line with RPI inflation (adding 7p to the cost of a litre of fuel). Hunt announced that the fuel cut will continue for another 12 months and fuel duty will be frozen.
In a bid to encourage older people to return to work, Hunt also announced plans to eliminate the lifetime allowance on pensions. Under existing rules, the total amount a person can save in a pension without having to pay an additional tax charge is capped.
The Annual Investment Allowance for small businesses will rise to £1 million, Hunt has confirmed, adding that 99% of businesses can now deduct the full value of their investment from each year's taxable profits.
Free childcare has been expanded to help parents get back into work. According to the government’s independent forecaster, the move could enable 60,000 more parents of young children to re-enter the workforce.
Working parents of two-year-olds will get 15-hours of free care from April 2024
Children from nine months will get 15-hours free childcare from September 2024
All eligible under-5s will get 30-hours free childcare from September 2025
From 1 April 2023, Hunt announced an increase in the rate of relief for loss-making R&D-intensive SMEs. Businesses whose eligible R&D expenditure makes up at least 40% of their total expenditure should receive an effective credit of 27p for every £1.
Hunt said he would reform film and TV relief from a rebate of 25% to a new ‘expenditure credit’ of 34% from January 2024, adding that the qualifying threshold for high-end TV shows would be held at £1M.
To help drive economic growth, Hunt announced that 12 UK locations will become ‘investment zones’, including the West Midlands, Greater Manchester, the North-east, South Yorkshire, West Yorkshire, East Midlands, Teesside and Liverpool.
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