After presenting a Budget-in-all-but name with the Autumn Statement, the Spring Budget was delivered against the backdrop of a day of widespread industrial action. The run-up to the event appeared deliberately downplayed, save for a late flurry of leaks highlighting a focus on childcare at one end of the scale and pensions at the other. While acknowledging the Prime Minister's two objectives of halving inflation and reducing debt, Mr Hunt focused his Spring Budget on the Prime Minister's third objective – getting the economy going.
In a wide-ranging and longer than usual speech, there were some key headline items:
- The inflation rate is forecast by the Office for Budget Responsibility to fall from 10.1% (January 2023) to just 2.9% by the end of 2023.
- The lifetime allowance for pensions will be abolished from April 2024, with the lifetime allowance charge withdrawn from April 2023.
- In light of the removal of the lifetime allowance, a new monetary limit for the tax-free pension commencement lump sum will be introduced for 2023/24 of £268,275 (equivalent to 25% of the current standard lifetime allowance).
- The annual allowance for pensions will increase by 50% to £60,000 from 2023/24 and the money purchase annual allowance will rise from £4,000 to £10,000 from 2023/24.
- Companies investing in new plant and machinery in the three years from 1 April 2023 can claim a first-year allowance of up to 100% of expenditure.
- To offset the previously announced reductions in the repayable research and development tax credits for small and medium-sized enterprises (SMEs), loss making that spend 40% or more of their total expenditure on research and development will be able to continue to claim payable tax credits at 14.5% (rather than the new reduced rate of 10%) from April 2023.
To find out more about the key announcements, download our summary of the Spring Budget.
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