The Chancellor of the Exchequer Jeremy Hunt delivered his first full Budget to Parliament today, once again with a focus on growth but thankfully in a less radical way than we saw from the previous Chancellor last Autumn. I am pleased to summarise below the main points.
Tax
Income tax and National Insurance rates and thresholds remain unchanged.
ISA subscription limits remain unchanged at £20,000.
Corporation tax increase from 19% to 25% will go ahead from April 2023 for firms which make a profit of more than £250,000.
From 1 April 2023 until 31 March 2026 investments made by companies in qualifying plant and machinery will qualify for a 100% first-year allowance against corporation tax. The intention is to make this permanent.
Pensions
The lifetime allowance charge will be abolished from 6 April 2023 with the lifetime allowance to be abolished in full in a future Finance Bill.
The maximum tax free cash payable for individuals without protection will remain £268,275 and not increase in future.
The pensions annual allowance will increase from £40,000 to £60,000 from 6 April 2023. Carry forward of unused annual allowances from the 3 previous tax years will remain available.
The money purchase annual allowance will increase from £4000 to £10,000 and the minimum tapered annual allowance from £4000 to £10,000 from 6 April 2023.
The adjusted income threshold for the tapered annual allowance will increase from £240,000 to £260,000 from 6 April 2023.
Energy costs and duties
The Energy Price Guarantee across the UK will remain at £2500 a year for the typical household for an additional three months until June 2023. The planned increase to £3,000 a year will now be implemented on 1 July 2023.
Alcohol duty rates are frozen until August 2023 and will then increase by RPI.
The 5p fuel duty cut is extended for 12 months and there will be no RPI increase in 2023/2024.
Welfare and work
30 free hours per week will be available for working parents with children aged 9 months up to 3 years in England, where eligibility will match the existing 3 to 4 year-old 30 hours offer.
There will be an expansion of the midlife MOT Jobcentre Plus offer to reach more claimants aged over 50 through support sessions, improving the digital midlife MOT tool, and working with employers and pension providers to encourage signposting to the midlife MOT and related support.
Disability benefits reforms including plans to abolish the work capability assessment and to separate benefits entitlement from an individual’s ability to work.
Local government and investment zones
New devolution deals for Greater Manchester and the West Midlands giving local leaders greater control over local transport, employment, housing, innovation and net zero priorities.
12 new investment zones to be launched in the West Midlands, Greater Manchester, the north-east, South Yorkshire, West Yorkshire, East Midlands, Teesside and Liverpool with at least one in Scotland, Wales and Northern Ireland. These will be knowledge-intensive growth clusters intended to drive the growth of at least one of our key future sectors - green industries, digital technologies, life sciences, creative industries and advanced manufacturing.
Comment
There were a number of technical points in the Budget this year but the one measure which stood out for me that I am very glad to see is the removal of the pensions Lifetime Allowance.
We have long been in favour of this being scrapped, as it has never made sense to me to have such strict limits on both amounts that can be paid into a pension and amounts that can be taken out at the other end; serving only to squeeze the bit in the middle that should be strongly encouraged, ie investment returns as a result of good investment decisions.
As always we'll be scrutinising the detail to determine the real-world impact of not just the Lifetime Allowance changes, but all the other measures, and consider how we might need to make changes to our clients Financial Plans to ensure they remain optimised.
If you have any immediate questions or concerns about how the Autumn Statement might affect you, please do get in touch.
Best wishes,
Michael Roberts FPFS
Chartered Financial Planner and Director
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