In the UK Government’s Spring Budget 2023 announced yesterday, the Chancellor, Jeremy Hunt, offered £9bn in business tax breaks and a pension boost in an effort to swerve a recession, but is more ‘major surgery’ needed as Labour thinks and does the budget go far enough? There’s plenty to digest, especially for the business community.
The UK Government emphasised its commitment to implementing a budget for growth, reducing underlying national debt, tackling recession with a forecast that inflation would be flatlining in 2023 and getting people back to work.
Highlights include the Energy Price Guarantee being extended by 3 months; pre-payment meters charges are to be brought in line with direct debit facilities; in time, there will be free childcare for children aged nine months to five-year-old; more support for charities (£100M) and the voluntary sector (£10M); as well as reform to the pension tax relief with an aim of reducing economic inactivity.
In terms of growth for the economy, the UK has been hailed as the “best place to do business” and the “best place to invest in” and “one of the best places in the world for female entrepreneurs” with the Government announcing the following key measures for businesses:
- EMI schemes – The Government has published its response to an EMI review it has carried out, and the three main outcomes are summarised below:
From 6 April 2023,
(1) The removal of the requirement for a signed working time declaration; and
(2) The removal of the requirement to set out share restrictions in an option agreement.
From 6 April 2024,
(3) An extension of the time limit within which companies must submit an EMI notification.
- Corporation tax: from 1st April 2023, the increase in the main rate, from 19% to 25%, for businesses with profits of £250k or more has been confirmed. The small profits rate (< £50k) remains at 19% and there is marginal relief between the small profits and at themain rate.
- “Full expensing”: 100% capital allowances for qualifying plant and machinery.
- A new Research & Development Scheme: from 1st April 2023, SME companies whose qualifying R&D expenditure constitutes at least 40% of total expenditure will be able to gain credit for 27p in every £1. Two new qualifying expenditure categories have been created, for data licences and cloud computing services.
- Creative industry reliefs: from 1st April 2024, the existing additional deduction tax reliefs allowed for films, TV and video games will be reformed. New Audio-Visual Expenditure Credits will be allowed for film and high-end TV (34% credit), for animation and children’s TV (39% credit) and a new credit will be allowed for Video Games Expenditure (34% credit).