Spring Budget 2023: Key Highlights and Summary Points

On 15 March 2023, Chancellor of the Chancellor of the Exchequer? Jeremy Hunt MP presented his Spring Budget statement to Parliament, bringing with it a positive outlook for the UK economy. Despite the challenges posed by weak economic growth and high inflation, there are encouraging signs that the economy is proving more resilient than expected. Developments since November have been largely positive, leading to a brighter outlook for public finances.

The Office for Budget Responsibility (OBR) has described the outlook as "somewhat brighter," with improvements in the forecasts for the economy leading to improvements in the public finances. Although there are still significant structural challenges to overcome, the updates provide hope that the UK economy is on a positive trajectory.

Overall, the Spring Budget statement provides a hopeful and positive outlook for the future of the UK economy, with indications of growth and stability in the years ahead.

Following are the summarized points for the Spring Budget 2023 announcement. You can access the Spring Budget 2023 from the official sources: https://www.gov.uk/government/publications/spring-budget-2023.

Taxation Policies and Wages:

• The lifetime allowance for pensions will be removed, allowing workers to accumulate as much pension savings as they want without being subject to additional taxes.
• The tax-free yearly allowance for pension pots will be raised from ￡40,000 to ￡60,000, after being frozen for nine years.
• Fuel duty will be frozen for another year, maintaining the temporary 5p reduction in fuel duty on diesel and petrol.
• From August, alcohol taxes will be increased in line with inflation, but beer, cider, and wine sold in pubs will have new reliefs.
• Tobacco tax will be raised by 2% above inflation, and hand-rolling tobacco will be subject to a 6% above inflation tax increase.

Energy and Environment:

• The government has extended its energy bill subsidy program for three more months, ending in June. The program restricts average household energy bills to ￡2,500 annually.
• The government has pledged to invest ￡20 billion in low-carbon energy initiatives over the next two decades, with an emphasis on carbon capture and storage.
• Prepayment meter customers will benefit from a ￡200 million investment to bring energy charges in line with those of direct debit customers.
• For investment purposes, nuclear energy will be deemed environmentally sustainable, with additional public funding promised.
• To cope with rising swimming pool heating expenses and improve energy efficiency, leisure centers will receive ￡63 million in funding.
• Overall, the government is taking measures to promote affordable and efficient energy while also investing in low-carbon energy initiatives to reduce emissions.

Job and Work:

• Starting from April 2024, the 30-hour free childcare scheme for working parents in England will cover one- and two-year-olds, and it will be phased in gradually.
• Families receiving universal credit will now receive upfront childcare support instead of waiting for payment after the fact, and the monthly cap per child will be increased from ￡646 to ￡951.
• To incentivize individuals to become childminders, a payment of ￡600 will be offered, and regulations for childminders in England will be relaxed to allow them to care for more children.
• A new fitness-to-work assessment system will be put in place to determine eligibility for health-related benefits.
• A new voluntary employment program, called Universal Support, will be launched in England and Wales to aid disabled individuals in finding employment.
• Lead child carers on universal credit will be subject to stricter work search requirements and increased job assistance.
• ￡63m in funding will be allocated towards programs encouraging individuals over 50 to return to work, including skills boot camps and "returnerships."
• Immigration rules will be eased for five positions in the construction sector to address labour shortages.

Economy and Public Finances:

• The UK is forecast to experience a slight contraction of 0.2% in its economy in 2023, but it is not expected to enter into a recession.
• The growth rate is projected to be 1.8% in the coming year, with increases of 2.5% in 2025 and 2.1% in 2026.
• Inflation in the UK is predicted to decline to 2.9% by the end of 2023, compared to 10.7% in the last quarter of 2022.
• The underlying debt is estimated to be 92.4% of the country's GDP in the current year, with an increase to 93.7% in 2024.

Business and Trade:

• The corporation tax rate for businesses with taxable profits over ￡250,000 will increase from 19% to 25%.
• Companies with profits ranging between ￡50,000 and ￡250,000 will pay a corporation tax rate between 19% and 25%.
• Businesses can lower their taxable profits by deducting investments in new machinery and technology.
• 12 new Investment Zones across the UK will receive tax breaks and other benefits, funded by ￡80m each over the next five years.
• Streamlined rules will reduce paperwork and allow international traders more time to submit customs forms.

Other measures for the economy:

• The UK government has committed to boosting defence spending by ￡11bn over the next five years.
• There will be stricter penalties for individuals convicted of promoting tax avoidance schemes.
• Local councils in England will receive ￡200m to repair potholes.
• Charities in England that focus on suicide prevention will receive an additional ￡10m in funding over the next two years.
• The process for approving new medical products will be simplified.
• The establishment of a ￡900m supercomputer facility will support the growth of the UK's AI industry.