The Spring Budget was delivered with an up-beat tone, with Chancellor, Jeremy Hunt claiming that many of the difficult decisions he took in November are now paying off, announcing that the UK will not enter a technical recession in 2023, and inflation will fall to 2.9%.
As is always the case, some of the announcements may differ in Scotland as they are devolved decisions.
In the meantime, our team have analysed the detail and summarised the key areas of focus for our clients to consider:
Your personal finances
- Pensions
Three key changes around pensions were announced in the Spring Budget, with the goal perhaps being to encourage retirees back into the workforce. The most surprising announcement was the commitment to remove the Lifetime Allowance charge from April 2023, and fully abolish it by 2024.
Read our full analysis on Pensions here
- Personal Taxes
The changes to the Lifetime Allowance, will mean greater tax savings can be achieved in Scotland when contributing more into pension than in the rest of the UK. However, with Scottish rates of income tax now going up by a further percentage point on 6 April 2023 for higher rate and additional rate taxpayers (42% & 47% respectively), there will be fiscal drag felt.
Read our full analysis on Personal Taxes here
Business matters
- Employment Taxes
Plans were announced for employers to help remove barriers to work for over 6 millions adults. Do they go far enough?
Read our full analysis on Employment Taxes here
- Innovation Taxes
The success of the UK’s creative and life science industries was celebrated. What measures have been put in place to ensure the UK becomes Europe’s most dynamic enterprise economy?
Read our full analysis on Innovation Taxes here
- Entrepreneurial Taxes
One way for the Government to achieve their growth ambitions is to encourage investment into businesses and to help companies deliver packages that incentivise their staff. Proposed changes made during the Autumn Statement in 2022, will be introduced in 2023.
Read our full analysis on Entrepreneurial Taxes here
- Capital Allowances
One of the key changes announced was the introduction of full expensing for qualifying capital expenditure. This measure is effective from 1 April 2023 to 31 March 2026, coinciding with the end of the Super Deduction, and provides a 100% deduction for unlimited capital expenditure on IT and plant & machinery.
Read our full analysis on Capital Allowances announcements here
- Large corporates
For businesses with financing costs exceeding £2million per annum, there were several changes to the Corporate Interest Restriction rules. There were also some key updates for multinational groups.
Read our full analysis for large corporates here
- Quarterly instalment payments
The introduction of full expensing for qualifying capital expenditure on plant and machinery, noted above, is a significant development to replace the Super Deduction - especially for companies operating with the Quarterly Instalment Payments (QIPs) regime.
Read our full overview of quarterly instalment payments here
- VAT and Indirect Taxes
What is happening to VAT on fuel and alcohol? Two areas that much of the UK public listen out for in the Budget. Good news to see Fuel Duty frozen and Duty on draught products in pubs will be up to 11p lower than the Duty on similar drinks sold in the retail environment.
Read our full analysis on VAT and Indirect Taxes here
- Energy sector
Whilst some of the announcements were to target the cost of living crisis, by keeping the Energy Price Guarantee to £2,500 until the end of June 2023, there were other announcements for the sector around green industries and green finance, and a call for evidence on options to reform the VAT relief for the installation of energy saving materials in the UK.
Read our full overview of the key announcements affecting the Energy sector
- Other tax matters
In addition to the major announcements above, we’ve also summarised the other key tax matters to be aware of in your business planning, including tax avoidance crackdown, tonnage tax, and HMRC's tackling of the tax gap.
Partner and Head of Tax
Susie Walker
Tax Partner and Head of Tax, Susie joined Johnston Carmichael in 2012 following 20 years with Bank of Scotland, HBOS and latterly Lloyds Banking Group, as Group Tax Director.
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