The Spring Budget was unveiled with the Chancellor of the Exchequer making his much-anticipated announcement against a turbulent political and economic backdrop.
With a number of different and complex priorities to juggle, from tackling the cost-of-living crisis to boosting business investment in the UK, it was a tricky tightrope for Jeremy Hunt to walk, particularly given the need to maintain the confidence of the markets.
So what are the key announcements? And what do they mean for you?
Business investment and taxation
As previously announced, Corporation Tax is to go up from 19% to 25%. This affects companies with over £250,000 in profits and represents its largest hike since 1974. A taper system will protect the smaller businesses, with companies earning under £50,000 paying 19% and those with profits between £50,000 and £250,000 paying between 19% and 25%. It does mean that the corporation tax landscape will become more complex.
There’s a real push for businesses to invest in new tech and machinery, with the Annual Investment Allowance increasing to £1m, allowing companies to deduct these investments in order to lower taxable profits.
There’s a partial reversal of research and development (R&D) tax credit cuts, with an increased rate of relief for loss-making R&D small and medium-sized enterprises. Eligible companies – those spending over 40% of their money on research and development – will now be able to claim £27 back from the Treasury for every £100 they spend on R&D costs, a 27% rate.
Pensions
Savers were given a welcome boost with news that the pensions annual tax-free allowance will be increased from £40,000 to £60,000. If there is an excess above the Annual Allowance, a tax charge arises. High earners are subject to a Tapered Annual Allowance. The minimum Tapered Annual Allowance will increase from £4,000 to £10,000. In addition, the adjusted income level required for the Tapered Annual Allowance to apply increases from £240,000 to £260,000. These pension changes will not come into effect in until 6th April.
Over-50s are being encouraged to extend their working lives with the abolition of the lifetime allowance charge. The charge is to be removed next month, before being fully abolished in April next year.
ISAs
The adult ISA annual subscription limit for 2023/2024 will remain unchanged at £20,000 and the annual subscription limits for Child Trust Funds and for Junior ISAs for 2023/2024 will remain unchanged at £9,000.
Personal taxation
There’s good news for working parents, with the introduction of 30 hours of free childcare for children over the age of 9 months. The introduction of the scheme will be rolled out in stages between April 2024 and September 2025.
The Chancellor acknowledged at the start of his statement that the British economy is facing “enormous challenges”. The UK is predicted to narrowly avoid a recession this year and there is cautious optimism that the UK may be over the worst of the inflation crisis. But time will tell whether the measures announced within the Spring Budget will help kickstart the economy and boost business investment.
It’s worth taking a bit of time to think through whether any of the Budget provisions may potentially impact your own business and whether you need to consider your current financial plans. If you do, you can contact us for a discussion on 01483 205890 or email tellmemore@omniumwealth.com.
This document is solely for information purposes and nothing in this document is intended to constitute advice or a recommendation. You should not make any investment decisions based on its content.
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