You will be forgiven for thinking there have been rather a lot of Budgets recently, but it is that time of year again and the Chancellor, Jeremy Hunt, formally announced his 2023 Spring Budget today.

The question on everybody’s lips here at CBW has been (and no, not “what on earth was Mr Perkins doing?!”) “Where were the Tax announcements?” Other than announcing pension allowance increases, which had been leaked in various forms, the Chancellor barely mentioned taxes in his speech. These were set out in the accompanying documents which were released with record speed this year.  

Ahead of CBW’s in depth analysis, which will be published once we have had time to give the detail our considered thoughts, here is our summary of the highlights of what we know so far: 

Pensions  

• The pension contribution Annual Allowance, is being increased by 50% to £60,000 from 6 April 2023.  This means that the maximum amount that most people will be able to contribute tax free will be £60,000.   
• At the same time, the tapered allowance for the highest earners will increase from £4,000 to £10,000, with the income threshold also being increased to £260,000, reducing the pain of a tax clawback felt by those wanting to make pension contributions, or who have had contributions made on their behalf.  
• The Lifetime Allowance for Pension contributions will be abolished from April 2023, so that more people can continue to make contributions without fear of an additional tax liability.  

Personal Taxes 

• Personal Tax Thresholds and Rates in the coming two years will remain unchanged from those announced in the Autumn, with the personal allowance being frozen for the next two years at £12,570, all other rates and allowances remaining frozen, other than the threshold for the additional rate of tax falling to £125,140. 
• As announced over the Summer, from 6 April 2023, divorcing couples will benefit from a longer period of time to transfer assets between themselves without facing a CGT liability. The current period of the end of the tax year of separation for most assets and within nine months of leaving a property will be extended to three years, or indefinitely where the assets are the subject of a formal divorce agreement.  

Employment  

Various measures will be put into place to remove the barriers for working and to help people to get back into work, including: 

• Abolition of the Work Capability Assessment for those claiming disability benefits 
• Reducing the costs of childcare – to be phased in over time
• Funding for a new program to help retrain those over 50 

Business Taxes  

• Annual Investment Allowance and the Super Deduction for Capital Allowances to be scrapped in favour of full relief for all Capital Expenditure for at least the next three years, with a view to making this a permanent change when it is affordable to do so. This will include 100% relief in the first year for main pool expenditure and a 50% first year allowances for items which qualify for the special rate.  

Corporation Tax 

• The planned Corporation Tax increase to 25% from 1 April 2023 will go ahead although it is expected that only 10% of companies will ultimately pay the full rate. Those with profits of less than £50,000 will continue to pay 19%, and those with profits between £50,000 and £250,000 paying a marginal hybrid rate between the two rates.   
• From 1 April 2023 R&D reliefs to be reformed to provide a 14.5% “enhanced credit” for R&S intensive SMEs, who spend at least 40% of their total expenditure on R&D costs, higher than the 10% credit currently available.  

Energy 

• The Energy Price Guarantee will continue to be capped at an average of £2,500 per year until the end of June 2023, when it is widely expected that energy prices will begin to fall. In addition, Energy Prepayment meter charges to be brought into line with the prices paid by those on direct debits.  
• Nuclear Energy to be reclassified as “sustainable”, with the expectation of increasing investment. 
• Fuel duty to be frozen, with the 5p cut being extended until March 2024.  

Other  

• ISA allowances to remain unchanged at £20,000 for the coming year. 
• From August 2023, alcohol taxes for draught beers will be 11p lower than in supermarkets, with the aim of encouraging more people to go out for a pint.  
• Heavier penalties for those committing Tax Fraud, and those enabling them or promoting tax avoidance schemes will continue to be rolled out. 

Watch this space for CBW’s full Budget Report, but in the meantime, if you have any questions, please don’t hesitate to contact a member of the CBW tax team.