If you’re getting ready for the new Tax Year, the Spring Budget is something to take keen interest in, as a lot of the announcements will affect you and your business in some way. Overall, the outlook for the UK economy in 2023-24 is definitely looking more positive, with the aim to half inflation, reduce debt and get the economy moving. Now the Spring Budget has been announced, let’s take a look at what will affect you going into the 2023-24 tax year...
Inflation is set to fall to 2.9% by the end of the year
Great news for everyone is that the rate of price rises, or inflation, is forecast to fall to 2 .9% from 10.7 %.
Economy forecast to grow by 1.8% next year
After this year the UK economy will grow in every single year of the forecast period – by 1. 8% in 2024 , 2.5% in 2025, 2.1% in 2026 and 1.9% in 2027.
Energy bill support
The Energy Price Guarantee will remain at £2 ,500 for the typical household for the next three months. This means that the average family will save a further £ 160 on top of the support measures already in place.
Small Business Investment increased to £1m
The Annual Investment Allowance has increased to £ 1m for small businesses, meaning 99% of all businesses can deduct the full value of all their investment from that year ’s taxable profits. This new policy aims to see full capital expensing for the next 3 years, with an intention to make it permanent as soon as responsibly possible. This means every £1 a company invests in IT equipment, plant or machinery can be deducted in full and immediately from taxable profits.
Tax boost for smaller and medium businesses
The chancellor has announced that small or medium-sized businesses 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 Research and Development.
12 new Investment Zones
The government said the scheme, which is backed by £80m of investment over five years in each of the new high-growth zones, is designed to accelerate research and development in the UK’s “ most budding industries''. They will be spread across the West Midlands, Greater Manchester, the North East, South Yorkshire, West Yorkshire, East Midlands, Teesside and Liverpool. There will also be at least once in each of Scotland, Wales and Northern Ireland.
Corporation tax to increase to 25%
Corporation tax for businesses is to increase from 19% to 25% . Firms which make a profit of more than £250,000 will pay 25% tax on their profits from April.
Extending a cut to fuel duty
To help households under pressure from living costs, Fuel duty will remain frozen and the 5p reduction will be maintained for a further year. This will save the average motorist £100 next year.
“Returnerships” for Over 50s wanting to re-enter the workplace
3.5m people of pre-retirement age but over 50 are not working. Jeremy Hunt claimed that “Older people are the most skilled and experienced people we have” and “no country can thrive if it turns its back on such a wealth of talent and ability ”. A new apprenticeship scheme for over 50s that want to return to work called “ returnerships”.
Pension Taxes
The chancellor has abolished lifetime allowance on amount workers can save in pensions without paying tax. Hunt says he will increase the pensions annual tax-free allowance from £40,000 to £60,000 and will abolish the Lifetime Allowance – previously set at £ 1.07m.
Free childcare for working parents
To help parents get back to work , starting from April 2024, every child over 9 months will receive 30 hours of free childcare per week . Government will pay the costs upfront and increase funding by 30% per year. Incentives of £600 for those that move into the childcare profession.
On top of this, there will be funding for schools to provide wraparound care so children can be dropped off and picked up from 8am to 6pm.
Other key takeaways
- Defence spending to increase by £11b over the next 5 years
- £63m fund to keep public leisure centres and pools afloat
- The Voluntary sector will get money to help with suicide prevention, assigning £10m for the next 10 years.
- Jeremy Hunt allocated £400m in funding to increase the availability of mental health and musculoskeletal resources for workers.
- Universal Credit sanctions to be ‘applied more rigorously ’
- Duty on pint is frozen - from August 1st, duty on draught products in pubs will be 11p lower than the duty in supermarkets.
- Potholes fund increased by £200m
Gorilla Accounting
Gorilla Accounting are experienced, expert contractor accountants providing all inclusive fixed-fee accountancy packages for contractors and freelancers.
If you already have an accountant but aren't getting the service you deserve, switching to Gorilla Accounting couldn’t be easier. They take care of everything for you and will even contact your previous accountant on your behalf.
