It was expected to be a “steady as she goes” Budget from Jeremy Hunt and that was largely what we got. He suggested it was a Budget for growth but it felt more like optimism with stability for a fragile economy aiming to keep inflation under control with promises of further changes in the future.
We already knew the main tax changes and rates that will be in place from previous announcements. The main headline being the increase in corporation tax rates to 25% for profits above £250,000 from 1 April 2023. Whilst the 130% super deduction is disappearing, it was pleasing to hear that 100% capital allowances will be available and uncapped from 1 April 2023. There was also an announcement of enhanced tax relief for R&D intensive SMEs.
Some headlines had been trailed earlier this week and there were major announcements today in a number of areas:
• The pension annual allowance increasing from £40,000 to £60,000 will promote larger lump sums to be saved, which will prove valuable given the corporation tax increase.
• One of the most significant tax changes was the announcement that the pension lifetime allowance has been scrapped. This was aimed at benefitting senior NHS employees and encouraging them to continue working. However, it will be welcome news for wealthy individuals as it represents a major tax giveaway.
• There were promises about investment in the technology and life sciences sector together with investment zones and innovation clusters. We will have to wait and review the detail on those announcements.
• The energy price guarantee has been extended until June 2023 and fuel duty continues to be frozen.
• Major childcare reforms were announced along with other measures aimed at encouraging people to get back to work (such as a new returnership training scheme for over 50's). These are being phased in over a period of time so it remains to be seen whether this will actually help with labour and skills shortages.
Whilst it was the relatively quiet Budget that many expected, there are some significant tax planning opportunities for the future so please do get in touch if you would like to discuss them further and understand their impact on you.
