Your guide to the 2023 Spring Budget

How does will this year’s budget impact you and your business?

No rabbits and no hats.

Back in the day, as budget day approached, a frisson of anticipation would run down the collective spine of the population. It was a bit like The Grand National or the Boat Race – an annual event in a sector that most of us know nothing about … but we'd all be glued to the TV in eager anticipation of an exciting event. Who would be getting a handy leg-up? Pensioners? The unemployed? The super-rich? Who would be dunked in a cold bath? Homeowners? Students? Business? You never could tell.

Then there was always the question, "Will the chancellor be pulling a rabbit out of his hat?" A couple of little treats – sweetness to offset the bitter pill of higher taxes.

But how times have changed! These days, budgets are much less exciting. Political machinations are way more important. For a week or two in advance, budgetary kites are flown. Leaks emerge hourly about what may or may not be on offer on the big day. It's a bit like Christmas presents appearing around the tree in the week before Christmas … but without the wrapping.

2023 Spring budget – what did we expect?

Key expectations for the budget included –

-       maintaining the planned increase in the corporation tax rate to 25%
-       no new windfall taxes
-       an increase in the Superdeduction
-       announcements on Investment Zones
-       Changes to the non-dom regime
-       consultations on a Carbon Border Adjustment Mechanism (CBAM)
-       fuel duty was likely to be frozen
-       business rates reform to be postponed again.

And the reality?

On March 15th, the big day arrived, and here’s a summary of the measures the Chancellor annoiunced -

HELPING HOUSEHOLDS WITH THE COST OF LIVING

A £200 energy rebate for all households in the UK, which will be paid in two instalments of £100 each
A £650 one-off payment to low-income households, which will be paid to households on Universal Credit, Pension Credit, and other benefits.
A £300 increase in the Warm Home Discount for eligible households, which will reduce their energy bills by £200.
A £150 discount on council tax bills for all households in England.

These measures are expected to provide some relief to households struggling with the rising cost of living. However, they are not expected to fully offset the impact of rising energy bills and other essential costs.

BOOSTING BUSINESS INVESTMENT

The government also announced a number of measures to boost business investment, including:

• A £12 billion increase in the Annual Investment Allowance, which will allow businesses to deduct the cost of investment from their tax bills up to £1,000,000 a year.

• A £20 billion increase in the Superdeduction, allowing businesses to deduct 130% of the cost of investment from their tax bills.

• A new £1 billion Energy Efficiency Business Support Scheme, which will support businesses to reduce their energy bills by providing grants and loans for energy efficiency measures.

These measures are expected to encourage businesses to invest in new equipment and technology, which will boost productivity and growth.

ENCOURAGING LABOUR MARKET ACTIVITY

The government also announced a number of measures to encourage labour market activity, including:

• A £500 million increase in the Work Allowance, which will increase the amount that people can earn before their benefits start to be reduced, making it more attractive for people to work.

• A new £1 billion Restart Scheme, which will provide support to people who have been unemployed for more than 12 months, helping people to get back into work.
  A new £2.5 billion National Skills Fund, which will support businesses in training their employees, helping businesses to improve their productivity and competitiveness.

These measures are expected to help people to get back into work and boost productivity and growth.

Overall impact of the budget

The UK government's spring budget is a package of measures aimed at –

-        helping households with the cost of living
-        boosting business investment
-        encouraging labour market activity

Some experts have welcomed these measures, suggesting that they will help to cushion the impact of the rising cost of living. However, others have criticised the budget, arguing that it doesn't go far enough to help those who are struggling to make ends meet.

As ever, of course, only time will tell.