Insights

The picture the Chancellor was trying to paint was one of optimism rather than doom and gloom. He shared figures that suggest the UK will not be entering a technical recession as forecast and that the government confidently expects to halve inflation, reduce debt, and get the economy growing.

In terms of other policies, the Budget delivery was framed around the four Es – Employment (boosting the labour supply), Education (providing skills and support), Everywhere (ensuring UK-wide growth) and Enterprise (referencing a pro-business tax regime).

The key tax announcements made as part of the new policy plans are:

For businesses:

• The Annual Investment Allowance will remain at £1m for all businesses;
• As a replacement to the existing 130% Super Deduction policy a new, full capital expensing programme is being launched for companies for the next 3 years. This means that companies incurring capital expenditure on new plant and machinery after 1 April 2023 and before 1 April 2026 will be able to claim:
  • 100% first year allowance for expenditure going into the general pool; and
  • 50% first year allowance for special rate expenditure (e.g. integral features).
• From 1 April 2023 there will be enhanced R&D Tax Credits for loss making ‘R&D intensive’ small and medium sized companies of £27 paid by HMRC for every £100 of R&D investment made by the company. A company will be considered to be ‘R&D intensive’ where its qualifying R&D expenditure is 40% or more of its total expenditure.
• The previously announced restrictions to be imposed on some overseas R&D expenditure has been delayed until 1 April 2024;
• From 1 April 2024 the following creative tax reliefs will be available:
  • 34% expenditure credit for film, TV and video games industries; and
  • 39% for high end TV and children’s programme development.

For individuals:

From April 2023 the following changes to the pension regime will apply:

• The Annual Allowance (the amount that can be paid into pensions with the benefit of tax relief) will increase from £40,000 to £60,000;
• The Tapered Annual Allowance (applying to those with annual earnings of £260,000 from 6 April 2023) will increase from £4,000 to £10,000;
• The Lifetime Allowance charge (the tax charge applying to pension funds above the tax-free cap) will be removed and abolished from April 2024.

Other tax related announcements include details of additional investment of £47m in resources to support HMRC collecting tax debt, new legislation to give HMRC additional time to assess certain taxes, and an amendment to self-assessment tax returns with effect from 6 April 2024 to enable separate recording and reporting of crypto assets.

If you would like tax advice after reading our Spring Budget 2023 article, please contact us via partners@rjp.co.uk.