Spring Budget 2023 at a glance

Chancellor's Spring Budget 15 March 2023

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Jeremy Hunt from the Accounts Department presented his first Budget after his tax-rising Autumn Statement, continuing the stability-of-the-markets theme, with the emphasis on driving down inflation, government borrowing and interest rates. Stabilising the books is key.

Whilst the UK may have avoided a recession, the continuing Treasury orthodoxy of a high tax burden and fiscal drag may thwart attempts to grow the economy. With a general election likely in 2024, the Chancellor will be cognisant of the fact that he will soon need to pull a proverbial rabbit out of the hat on tax cuts, which he is currently resisting.

But the cuddly Chancellor wants to show his compassionate side with improved childcare over time for one and two years olds (but it doesn't really help people struggling right now), and pension flexibility for the over 50s to boost the UK workforce (although the latter may be seen as a big tax giveaway for those who least need it, and if Labour says it will reverse it in 18 months time then it won't work anyway).

We have the highest tax burden since Clement Atlee 70 years ago. The Corporation Tax rate rises by 6% from 1 April, the first rise since 1974, and personal tax thresholds are frozen until 2028, increasing the 4m already paying 40% income tax to 8m by then - a quarter of the workforce paying higher rate tax through fiscal drag.

Jeremy Hunt probably has three more fiscal event opportunities to promote growth and cut taxes before a general election. He may need to leave the Accounts Department to immerse himself in some vision-making and risk-taking.

Meanwhile, the Insolvency Service says the number of the companies entering insolvency rose by 17.5% year-on-year in February, the highest in four years.

Key points from the Chancellor's statement

Brief recap – key changes previously announced:

Personal tax thresholds, CGT IHT etc. limits all frozen until 2028
From April 2023 the rate at which people pay the additional rate of income tax, charged at 45%, will change from £150k to those earning over £125,140 (the figure at which personal allowances are fully abated).
Corporation tax to rise from 19% to 25% from 1 April 2023 for profits above £250,000
The Annual Investment Allowance is set permanently at £1m
National Insurance thresholds are frozen, and the Employment Allowance will be kept at £5,000. - see our separate article
Tax free allowance for capital gains will reduce in 2023--24 from £12,300 to 6,000 and again to 3,000 in 2024-25.  The limit above which gains must be reported to HMRC, regardless of whether there is tax to pay, rises to £50,000 of proceeds from April 2023.
Stamp Duty Land Tax cuts announced in the Mini-Budget Growth Plan will now be time-limited, ending on 31 March 2025. 
The tax-free dividend allowance will be reduced to £1,000 in 2023-24, and then to £500 in 2024-25.
Married Couple’s Allowance and Blind Person’s Allowance increased by 10.1% for 2023-24.
Business rates revaluation will happen in April, but there will be a new £13.6bn package of business rates support. 
Business rates relief for retail, hospitality, and leisure businesses is being extended and increased from 50% to 75% up to £110,000 per business in 2023-24.

Spring Budget 2023 new key measures announced:

Taxes

Super Deduction is replaced by a new Full Capital Expensing for the next three years, so every £1 a company invests in IT equipment, plant or machinery can be deducted in full from taxable profits.
Enhanced R&D tax credits for Small or medium-sized businesses who will be able to claim a credit worth £27 for every £100 they spend, if they spend 40% or more of their total expenditure on R&D. That's a high bar of spending which many companies will not be able to meet.
Enhanced tax credits for the creative sectors including film and TV
Pension annual contribution allowance to increase from £40,000 to £60,000
Pension Lifetime allowance abolished (previously set at £1.07m) (Labour says it will reverse the measure if it wins the next election, so some will wish to retire before then)
The Money Purchase Annual Allowance and the minimum Tapered Annual Allowance (TAA) will both be increased from £4,000 to £10,000, while the adjusted income threshold for the TAA will also be increased from £240,000 to £260,000 (see also guidance newsletter)
From 1 August, there will be 11p reduction in duty on draught beers
The 5p cut in fuel duty is retained for another year
ISA savings limits are frozen for the next year at £20,000 and the Junior ISA at £9,000
Transfers of assets between spouses and civil partners who are in the process of separating can be made on a no gain no loss basis for up to 3 years after the year they cease to live together, and an unlimited time when the assets are the subject of a formal divorce agreement.

Spending

New apprenticeship for returnerships for returning workers aged 50+
Childcare system reforms to help childcare providers and parents. Childcare costs can be paid upfront. The reforms are being phased in up to 2025.
Parents with children under 3, there will be 30 hours of free childcare - to be introduced in stages as childcare provision capacity increases
12 new investment zones to be established (with tax reliefs similar to Freeports)
New regeneration schemes across the UK, and new levelling up partnerships
The Energy Price Guarantee (£2,500 a year cap) will be extended for a further three months to 30 June 2023
4m householders on pre-payment meters will have their energy charges made comparable to direct debit payers
The Pensions Triple Lock and Pension Credit will be protected and rise in April 2023 by 10.1%.  (See Benefit and Pension rates 2023/24)
Increase in defence spending to 2.5% of GDP as circumstances allow
An increase in nuclear capacity as an environmentally sustainable energy source
More investment in growing the artificial intelligence sector and quantum computing
An annual £1m prize for innovative work in AI
£20bn for carbon capture projects
Disability benefits reform to allow disabled people to seek work without losing benefits - Universal Support. Expected to help 50,000 people every year
Increasing mental health provision for the UK workforce
Doubling care relief threshold to reduce taxes for foster carers
Workers on Universal Credit can work up to 18 hours a week without losing UC
Enhance DWP's midlife MOT service

Spring Budget documents

Autumn Statement documents

Tax Tables 2022/23 (23/24 tables to follow)

Revised and updated tax tables for year 2022/23

Finance Bill 2022-23

Finance Bill 2022 was published on 22 November 2022 (see summary of the Bill), with more detailed measures in the Spring Finance Bill 2023 following the Spring Budget.

Finance (No 2) Bill, 23 March 2023
Finance Bill 2022-23 documents. A Spring Finance Bill 2023 will be published
Finance Act 2022 received its Royal Assent on 24 February 2022.

UPDATE NOTE: Finance Act 2023 received Royal Assent on 10 January 2023. It was originally entitled ‘Finance (No 2) Bill 2022’.

July 2023 update - The Government will publish draft clauses for the next Finance Bill, which will largely cover pre-announced policy changes, on 18 July 2023, along with accompanying explanatory notes