Shrewsbury Tax Accountant’s Budget 2023 Breakdown

So quipped Chancellor Jeremy Hunt during his Budget speech yesterday; but apart from eleven pence off a pint of draught beer at your local pub, what else did Mr Hunt announce?

Budget 2023: Taxation measures

• The cap on the total amount individuals can accumulate in pensions savings over their lifetime before having to pay extra tax (currently £1.07m) is to be abolished
• The amount you can save into your pension pot tax-free, is to rise from £40,000 to £60,000 a year
• Fuel duty frozen and the 5p temporary cut, brought in last year, is to be continued for at least another 12 months
• From 1st August, the taxation of alcohol will shift to a system in which duty is paid by reference to the product’s final alcohol by volume (ABV), harmonizing the tax rates for different types of drinks. The duty on alcoholic drinks will also rise by 10%, but the tax on draft pints in pubs fall by 11p
• Tax on tobacco to increase by 2% above inflation, and 6% above inflation for hand-rolling tobacco

Budget 2023: Back to work measures

• From April 2024, 30 hours of free childcare for working parents in England is to be expanded to cover one and two-year-olds
• Universal Credit recipients will receive childcare support up front instead of in arrears, with the £646-a-month per child cap raised to £951
• £600 “incentive payments” for those becoming childminders, and relaxed rules in England to let childminders look after more children
• New voluntary employment scheme for disabled people in England and Wales, called Universal Support
• The over 50’s are to be encouraged to return to work by funding paid training at a workplace the Chancellor has dubbed “returnerships” and skills boot camps. He’s set aside £63M for this

Budget 2023: Business measures

• The main rate of corporation tax paid on taxable profits over £250,000, will still increase from 19% to 25%, but smaller companies with profits lower than £250,000 to pay rates as low as 19%
• Companies will be able to offset 100% of any investment in new machinery and technology, against their taxable profits
• The Chancellor also restored R&D tax credits, but restricted them to sectors like fintech and artificial intelligence
• Reduced paperwork for firms who trade internationally, plus they will also be given longer to submit customs forms under streamlined rules

Budget 2023: Energy measures

• Subsidies limiting household energy bills to £2,500 a year extended for three months
• £20bn to be invested over next two decades on low-carbon energy projects, with a focus on carbon capture and storage
• Nuclear energy to be classed as environmentally sustainable for investment purposes, with promise of more public funding
• £63m to help leisure centres with rising swimming pool heating costs, and invest to become more energy efficient

Budget 2023: Other measures

• A ramped-up campaign against individuals and firms marketing tax avoidance schemes, with prison sentences for those convicted
• A new streamlined approvals process for new medical products to boost the pharmaceutical industry
• £900 to be invested in building a new state-of-the-art super computer facility, to help UK’s AI industry
• And finally, who could disagree with Jeremy’s plans to spend £200m in the coming year to repair potholes in England

Tax Accountant’s view

Once again, this is a classic ‘curate’s egg’ budget, but overall it could have been a lot worse. I particularly welcome the childcare measures, as this will mean many hugely talented and experienced women will be able to resume their careers. I also applaud the 100% investment allowance to encourage firms to invest.

I’ll be back next week with a another Blog on aspects of the budget, once the fine print and statistics behind the headlines have been published. Right now, I’m off to the pub to enjoy a pint or two pints and will be sure to ask for my 11p discount!