Highlights: SPRING BUDGET 2023

On 15 March 2023, chancellor Jeremy Hunt presented his first budget which sets out the government’s plans for tax and spending policy. Alongside it, the Office for Budget Responsibility (OBR) published updated economic and fiscal forecasts for the next five years – running up to and beyond the next election. 

In the Autumn Statement 2022, the government focused on tax and spending to help restore economic stability, support public services and lay the foundation for long-term growth. This Spring Budget is building on this foundation, with a plan to deliver on three of the five key priorities set out by the Prime Minister in January: to halve inflation, grow the economy and get debt falling – ‘The Budget for Growth’. 

What is the difference between the SPRING BUDGET and the AUTUMN STATEMENT?

The Spring Budget and Autumn Statement are often used interchangeably, but there is actually a difference between them. 

In simple terms, the Budget is usually an annual plan where the Chancellor of the Exchequer announces how and where the Government is going to get money from to run the country (focusing on taxation) and what it will be spending that money on. 

It is worked out by the Chancellor and his office, the Treasury (the Government department which oversees the country’s finances). 

The Statement provides an update on the government’s plans (Budget), based on actual performance and the latest forecasts from the Office for Budget Responsibility (OBR) on how the UK economy will perform in the future. There is usually less detail in the Statement than in the Budget. 

England, Wales and Northern Ireland:

  • Income Tax Personal Allowance will remain at its current level of £12,570
  • The Higher Rate Threshold remains at £50,270
  • The Additional Rate Threshold will be reduced from £150,000 to £125,140 (increasing taxes for those on high incomes)
  • They will apply from 2023 to 2028

Note: Scotland has slightly different thresholds and the tax is paid to the Scottish Government. However, taxes on savings and dividends are the same as in the rest of the UK.

NIC Thresholds have been set till 2028.

You can find more information on these thresholds in the Company Taxation pages in the Company Car, LCV and HGV sections.

The planned HSCL for 2023 has been reversed and will no longer take place.

From April 2023 the Dividend Allowance will reduce from £2000 to £1000 and to £500 from April 2024.

The Government is continuing to support households and businesses by maintaining the rates of fuel duty at the current levels for an additional 12 months by extending the temporary 5p fuel duty cut and cancelling the planned increase in line with inflation for 2023-24.

The VAT registration (£85,000) and deregistration (£83,000) thresholds will not change until April 2026.

  • The main rate of corporation tax will increase from April 2023 to 25% on profits over £250,000
  • The rate for companies with small profits under £50,000 will remain at 19%
  • There will be tapered relief for companies with profits that fall between £50,000 and £250,000

To encourage businesses to invest and grow, the Annual Investment Allowance (AIA) is being set at a permanent level of £1 million from April 1, 2023. This amounts to full expensing for an estimated 99% of all UK businesses.

As previously announced, this temporary enhancement of Capital Allowances ended in March 2023

From 1 April 2023 until 31 March 2026, investments made by Corporation Tax paying companies on qualifying plant and machinery will qualify for a 100% first-year allowance for main rate assets.

There is no maximum amount which means companies across the UK will be able to write off the full cost in the year of investment, known as full expensing. This initiative is to soften the blow of the removal of Super Deductions and to encourage investment in plant and machinery.

The Government will collaborate with businesses and representative bodies to undertake a systematic review of tax guidance and forms for small businesses over the next 24 months to make it easier for small businesses to interact with the tax system as they set up and grow.

The Government will ensure guidance is clear, simple and easy to find, introduce step-by-step interactive guidance and modernise HMRC forms to improve the customer experience. They will also consult on expanding the ‘cash basis’ – a simplified way for sole traders to calculate and pay income tax.

Despite pressure from the UK motor industries to amend this, from April 2025, electric cars, vans and motorcycles will begin to pay VED in the same way as petrol and diesel vehicles.

Following consultation in 2022, the Government will introduce a new reformed HGV levy from August 2023, following the planned end of the current levy suspension period. (Details to be announced)

A refocused Investment Zones programme for 12 high-potential knowledge-intensive growth clusters across the UK. Eight in England and four across Scotland, Wales and Northern Ireland. This will involve tax packages and grant funding (worth over £80 billion in England). Discussions have begun and further details will be announced in due course.

The Government will allocate an additional £200 million for local road maintenance in England, including potholes, in 2023-24.


Explore how these policies will impact your business customer with these Essentials Finance and & Taxation guides:

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