What does the Spring Budget mean for you?

Chancellor of the Exchequer Jeremy Hunt has today announced the Government’s Spring Budget for 2023. Some measures outlined in the Autumn Statement following the highly controversial mini-budget in September have foreshadowed what has been announced today.

Before revealing the new measures making up the Spring Budget, Hunt told MPs in the House of Commons that the British economy is “proving the doubters wrong”, highlighting how the Office for Budget Responsibility (OBR) now forecast that there will be no recession in Britain. He further went on to state “we are following the plan and the plan is working.”

In summary, the measures announced as part of the Spring Budget seek to get more people into work and help to keep them there once in a job, as well as to relieve pressure on households and businesses that have been struggling under the weight of the cost-of-living crisis. There was however little on offer in terms of support for small businesses, with no further action on energy bills beyond the previously announced Energy Bill Discount Scheme which is due to come into play in April.

What has been announced:

Taxation and wages

• A cap on the amount workers can accumulate in pensions savings over their lifetime before having to pay extra tax (currently £1.07m) is to be abolished
• The tax-free yearly allowance for pension pots is to rise from £40,000 to £60,000 – as it has been frozen at £40,000 for the last nine years
• The impending 5p cut to fuel duty on petrol and diesel that was due to end in April, has been frozen for another year
• Alcohol taxes in pubs are to be 11p in the pound cheaper than the rate at a supermarket as a new measure is introduced in August – this is welcome news for the hospitality industry, as it gives pubs and businesses that sell alcoholic beverages a slight bit of breathing room when it comes to profit margins, allowing for more profitable trade

Energy

• The Government is going to retain its Energy Price Guarantee at £2,500 a year for an extra three months up until the end of June, rather than raising it to £3,000 a year as planned – this means that we can benefit from controlled energy prices going forward until the end of June, where energy prices alongside the Ofgen price cap are both due to drop reasonably
• £200m is being invested to bring energy charges for prepayment meters into line with prices for customers paying by direct debit, this affects up to 4m households – this means any households using a prepayment meter should get more energy for their money and will be charged in line with direct debit customers
• A commitment has been announced, for the UK to invest £20bn over next two decades on low-carbon energy projects, with a focus on carbon capture and storage
• The Government will now classify nuclear energy as environmentally sustainable for investment purposes, with a promise of more public funding becoming available
• New investment to the tune of £63m will help leisure centres with rising swimming pool heating costs, and invest to help them become more energy efficient

Jobs and work

• Working parents in England with three and four year-olds become eligible for 30 hours of free childcare per week. This will be extended to cover younger children when both parents are working. This will be a staged introduction, with 15 free hours of childcare for two-year-olds in April 2024, and in September 2024 for those aged over nine months, then 30 hours for all from September 2025 – this opens the door for many getting back into employment, and means businesses can begin to tackle staff shortages more ardently
• Families on universal credit are set to receive childcare support up front instead of in arrears, with the £646-a-month per child cap raised to £951
• £600 “incentive payments” will be available for those becoming childminders, and relaxed rules in England to allow childminders look after more children
• A new voluntary employment scheme titled Universal Support launched with funding for up to 50,000 places – this is another measure aimed at getting more people into work, businesses can get involved with and benefit from the scheme by offering voluntarily employment to solve staff shortages
• There will be more places available on “skills boot camps” to encourage over-50s who have left their jobs to return to the workplace

Economy and public finances

• The Office for Budget Responsibility now predicts that the UK will avoid recession in 2023, however the economy will shrink by 0.2%
• Furthermore, a growth of 1.8% is currently predicted for next year, rising to  2.5% in 2025 but down to 2.1% in 2026
• The UK’s inflation rate is predicted to fall to 2.9% by the end of this year, which would see it down from 10.7% in the last three months of 2022
• Underlying debt is forecast to be 92.4% of GDP this year, rising to 93.7% in 2024

Business and trade

• Main rate of corporation tax, paid by businesses on taxable profits over £250,000, confirmed to increase from 19% to 25%, after initially being suspended in the Autumn Statement – this means that corporations will be paying more tax 
• Companies with profits between £50,000 and £250,000 to pay between 19% and 25% corporation tax
• Companies will now be able to deduct investment in new machinery and technology in order to lower their taxable profits
• The Government will fund tax breaks and other benefits for 12 new Investment Zones across the UK, with investing £80m each over the next five years
• Reduced paperwork for international traders, who will also be given longer to submit customs forms under streamlined rules

You can read the Spring Budget in full here and stay up to date with all other industry news here.

If you would like to share your thoughts on the spring budget with us to feed back in to BEIS and the Hospitality Sector Council, please get in touch with us via [email protected]

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