'Budget for growth’
Five months ago, the then new Chancellor, Jeremy Hunt, presented an Autumn Statement that was more of a Budget than many formal Budgets. Not only did his Autumn Statement result in a greater increase in the tax burden than most Budgets – £55 billion by 2027/28 – it was also accompanied by a Finance Bill. With an election likely in autumn 2024, Mr Hunt's 'Budget for growth' looked set to be a steady-as-you-go fiscal non event.
Yet it turns out that over the next three tax years, Mr Hunt will hand back about £65 billion of the extra tax that he had planned to raise last November, although by 2027/28, he will still be about £40 billion a year better off.
- The lifetime allowance (LTA) for pensions has effectively been abolished from 2023/24.
- A new monetary limit for the taxfree pension commencement lump sum (PCLS) will be introduced for 2023/24 of £268,275 (equivalent to 25% of the current standard LTA).
- The annual allowance for pensions will be increased by 50% to a maximum of £60,000 from 2023/24 and the money purchase annual allowance (MPAA) will rise from £4,000 to £10,000.
- The energy price guarantee is maintained at the current £2,500 level until the end of June 2023.
- The scheduled 11p a litre duty increases in petrol and diesel will not go ahead.
Companies investing in new plant and machinery in the three years from 1 April 2023 can claim a first year allowance of up to 100% of expenditure.
SMEs that spend 40% or more of their total expenditure on R&D can claim a tax credit worth £27 for every £100 they spend from April 2023.
Up to 30 hours of free childcare will be available to working parents of children from the age of nine months by September 2025. Initially, from April 2024, working parents of twoyear- olds will be able to access 15 hours of free childcare per week.
The Office for Budget Responsibility forecasts that the CPI inflation rate will fall from the current 10.1% (January 2023) to just 2.9% by the end of the year.
If you have any questions about how the Spring Statement affects you, please do get in touch with your financial planner.