BUDGET SUMMARY: Here are the key points from Chancellor Jeremy Hunt’s 2023 Budget
Chancellor Jeremy Hunt presented his inaugural Budget to the House of Commons, with a primary focus on encouraging those who have left their jobs to re-enter the workforce and bolstering business investments.
Below are the main highlights of his announcements.
FUEL, ALCOHOL, PENSIONS, WAGES
Abolishing the cap on the amount workers can accumulate in pension savings over their lifetime before paying extra tax (currently at £1.07m)
Increasing the tax-free yearly allowance for pension pots from £40,000 to £60,000, after being frozen for nine years
Freezing fuel duty, extending the 5p cut to fuel duty on petrol and diesel, which was set to end in April, for an additional year
Implementing inflation-linked rises in alcohol taxes from August, with new tax reliefs for beer, cider, and wine sold in pubs
Raising the tax on tobacco by 2% above inflation, and by 6% above inflation for hand-rolling tobacco
ENERGY BILLS, PREPAYMENT METERS, AND NUCLEAR POWER
Extending government subsidies that limit typical household energy bills to £2,500 a year for three more months, until the end of June
Allocating £200m to align energy charges for prepayment meters with those for customers paying by direct debit, affecting four million households
Pledging to invest £20bn over the next two decades in low-carbon energy projects, with a focus on carbon capture and storage
Classifying nuclear energy as environmentally sustainable for investment purposes, with a commitment to additional public funding
Providing £63m to assist leisure centers in dealing with increasing swimming pool heating costs and to invest in becoming more energy-efficient
CHILDCARE, UNIVERSAL CREDIT, and BACK TO WORK PLANS
Chancellor Jeremy Hunt has unveiled the contents of his 2023 Budget in the House of Commons. The budget focuses on promoting business investment and encouraging those who have left their jobs to return to the workforce. Here is a summary of the main announcements:
30 HOURS FREE CHILDCARE: The 30 hours of free childcare for working parents in England will be expanded to cover one and two-year-olds. This will be rolled out in stages from April 2024.
UNIVERSAL CREDIT: Families on universal credit will receive childcare support up front instead of in arrears, and the £646-a-month per child cap will be raised to £951.
CHILD CARE: To increase the number of childminders, the government will offer £600 “incentive payments” and relaxed rules in England to let childminders look after more children.
BACK TO WORK: There will be a new fitness-to-work testing regime to qualify for health-related benefits, and a new voluntary employment scheme for disabled people in England and Wales, called Universal Support. Tougher requirements to look for work and increased job support for lead child carers on universal credit.
RETIREES: £63m will be allocated for programmes to encourage retirees over 50 back to work, “returnerships” and skills boot camps. Immigration rules will be relaxed for five roles in the construction sector to ease labour shortages.
GOVERNMENT DEBT, INFLATION, and ECONOMIC GROWTH
The Office for Budget Responsibility predicts that the UK will avoid a recession in 2023, but the economy will shrink by 0.2%.
A growth of 1.8% is predicted for next year, with 2.5% in 2025 and 2.1% in 2026.
The UK’s inflation rate is expected to fall to 2.9% by the end of this year, down from 10.7% in the last three months of 2022.
The underlying debt is forecast to be 92.4% of GDP this year, rising to 93.7% in 2024.
CORPORATION TAX, INVESTMENT ZONES, and TAX BREAKS
The main rate of corporation tax, paid by businesses on taxable profits over £250,000, is confirmed to increase from 19% to 25%.
Companies with profits between £50,000 and £250,000 will pay between 19% and 25%. Companies can deduct investment in new machinery and technology to lower their taxable profits.
Tax breaks and other benefits for 12 new Investment Zones across the UK will be funded by £80m each over the next five years.
International traders will have reduced paperwork and longer to submit customs forms under streamlined rules.
OTHER MEASURES
The government will raise defence spending by £11bn over the next five years.
Prison sentences will be imposed on those convicted of marketing tax avoidance schemes.
£200m this year will be given to help local councils in England repair potholes.
An extra £10m over the next two years will be allocated for charities in England helping to prevent suicide.
A streamlined approvals process is promised for new medical products, and £900m will be provided for a new supercomputer facility to help the UK’s AI industry.
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