With the rising cost of energy and inflation at a forty year high, the country has been on tenterhooks since November 2022’s Autumn Budget, waiting for the Government to achieve fiscal stability.
Hunt kicked things off on a positive note, committing to reduce inflation from 10.7% to 2.9% by the end of 2023 and announcing the Office for Budget Responsibility’s (OBR) latest forecast predicts that the UK will not enter a technical recession this year.
Despite The Chancellor stating previously the announcement would be a “slimmed down plan,” he managed to pull a rabbit out of his red box, announcing that the Energy Price Guarantee will be extended until June, a relief for millions who have been struggling to pay their household bills.
But what else has been announced? In our DJH Mitten Clarke Spring Statement Report, we’ve taken a deeper dive into the Chancellors statement, but here are some of the key takeaways:
U-turn on Energy Price Guarantee
We can hear sighs of relief already at the good news- the Energy Price Guarantee (EPG) has been extended until June 2023. The Chancellor was put under huge pressure to help millions save on energy bills, and it has been announced that the EPG will remain capped at £2,500 for an additional three months.
The decision was made with the hope of easing pressure on families, and to bridge the gap as bills should reduce from July due to the summer months, with the expectation they’ll fall to £2000.
However, during the Prime Ministers questions ahead of Hunt’s statement, Rishi Sunak faced huge backlash, as despite extending the EPG, some believe it only delays the price hike, as opposed to a resolution of the rocketing energy bills.
Tax and wages
Back to work drive
In our predictions article earlier this month, we alluded to an incentive to support people to go back to the work place. A “Back-to-work budget” has now been formally announced to encourage those over 50, who took early retirement, to go back into employment.
Within his plans for the drive, Hunt is set to develop a series of boot camps to help retirees gain new skills and abilities to help them get back into work.
Pension allowance increase
As a bid to get people working for longer than they may have originally planned, the lifetime pension allowance cap which currently sits at £1.07 million, has been abolished.
Its suggested the change in the maximum allowance has been targeted to Medical Professionals who leave the NHS early, to avoid being stung by taxes on any savings they may have.
The tax-free annual allowance has also risen from £40,000 to £60,000. The increase comes after a freeze for 9 years on the annual allowance.
Fuel duty cap
The Chancellor also confirmed our prediction of the fuel duty extension – the 5p per litre cut to fuel will be frozen for another 12 months.
Business
Corporation tax hike
Disappointingly, corporation tax is still set to rise from the current headline rate of 19% to 25% from 1 April. Although only affecting an estimated 10% of businesses, Hunt has been warned that the hike will affect growth, and put jobs deeply at risk.
Citing the ‘discouraging’ corporation tax increase as it’s reason, one of the UK’s biggest companies, AstraZeneca, has already decided to move future investment to Ireland.
New policy for Capital Allowances
With the introduction of “Full expensing” for the next three years, companies are able to deduct capital costs for new plant, machinery and technology, in order to lower their taxable profits. This enables all qualifying costs to be deducted in full from taxable profits. The 50% First Year Allowance for Special Rate qualifying items has also been extended.
Enhanced credit for R&D Tax Relief
For R&D intensive SME’s there will be additional tax support. For every £100 that is spent on R&D, eligible companies can claim £27 back, helping them to invest in more R&D, and enable growth for the future.
Investment Zones
Twelve brand new Investment Zones will be created to drive business investment throughout the UK. Tax breaks will be implemented within the zones planned in the West Midlands, Greater Manchester, the North East, South Yorkshire, West Yorkshire, East Midlands, Teesside, and Liverpool, following a huge £80-million-pound funding per zone over the next five years creating.
Additional measures
Enhanced child care support
To support parents to go back to the work place, a new childcare package has been revealed to help eligible working parents. Working families will now have access to 30 hours of free childcare per week, for children between the age of 9 months and 4 years.
For those who rely on universal credit, childcare costs will now be paid up front. There will also be an increase to how much parents can claim for childcare by one hundred pounds.
Maximum caps for claims per month has also increased. Despite remaining at £646 for one child and £1,108 for two for 18 years, it has now increased to £950 for one child and £1,680 for two.
The change has come to light with the hope that struggling parents will be in a better position in a year with the new childcare benefits, which will assist in making it easier for them to go back to work.
Leisure Centres
Jeremy Hunt also outlined a series of plans to help leisure centres. £63-million-pound funding has been announced to help keep public leisure centres and pools “afloat.”
Charities
For charitable causes, £10-million-pound funding for suicide charities will be implemented for the next two years, and £400 million to increase mental health and muscular skeletor resources.
Support for those with a disability
Those who suffer with a disability have also been encouraged to work, with a guarantee that they will not lose any benefits, and additional support- named universal support, will be implemented. £4,000 will be issued to each individual suffering with a disability to help them secure a job.
Pothole mania
To help tackle a hindering problem for drivers, The Chancellor will also grant £200 million to help deal with potholes.
Duty on draught beer frozen
And finally, good news for those who are fans of draught beers- due to a Brexit pub guarantee, there will be a draught relief, where draught beer in pubs will be 11 pence lower.
So there we have it! Phew! Jeremy Hunt’s first Spring Budget.
But what do our experts think?
If you would like some guidance on putting plans in place to prepare your business for what has been announced, or if you want to simply chat through any concerns, you can get in touch by email to info@djhmittenclarke.co.uk.
