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Budget 2023 - Spring Budget at a glance

Updated: May 2, 2023


First and foremost lets look at what was said on Energy


Energy bills support


The Government’s Energy Price Guarantee, which subsidises household energy costs above a certain threshold, was previously scheduled to become less generous from April 1.


This would have seen the amount that a typical household pays per year rise from £2,500 to £3,000.

But Mr Hunt confirmed that support will now continue at the same level. It will save the average family £160 on their energy bills and cost the Treasury around £3bn.


He also confirmed that the so-called "prepayment premium" – where customers who use energy prepayment metres pay more than those on direct debit – would be scrapped from July.


The move is expected to save about four million households £45 a year.


Nothing has been announced as of yet on Business Energy costs.



 

The UK economy


In announcing the most recent OBR forecasts, Mr. Hunt stated that the UK is now anticipated to escape an economic recession due to better global conditions and actions taken by ministers following Liz Truss' disastrous mini-Budget.


In 2023, the GDP is now only expected to shrink by 0.2 percent, down from a more pessimistic forecast of 1.4 percent in November, he claimed.


After that, the economy is anticipated to expand by 1.8 percent in 2024, 2.5 percent in 2025, 2.1 percent in 2026, and 1.9 percent in 2027.


A one percentage point increase in unemployment is also not anticipated, and a sharp decline in high inflation is predicted.


According to Mr. Hunt, the OBR now expects it to drop from 10.7 percent at the end of 2022 to 2.9 percent by the end of 2023.


According to Rishi Sunak, this implies that the government will achieve its goal of lowering inflation.


 

Pension lifetime allowance abolished


The Chancellor revealed generous pension tax changes in an eye-catching effort to entice over-50s who took early retirement back to work.


Instead of simply increasing the threshold, as had been anticipated, he shocked MPs by abolishing the lifetime allowance, the maximum amount that workers can contribute to their pension pots before they are taxed.


Currently, the lifetime limit is just over £1 million.


In response to worries that clinicians are quitting too soon as a result of pension taxes, Mr. Hunt stated that the shift would result in 80 percent of NHS doctors no longer paying taxes on their pensions.


No one ought to be forced out of the employment because of taxes, the chancellor declared.


 

Childcare


Parents now face a significant financial strain as a result of the high cost of childcare, which experts have long cited as one of the most crucial problems that the government needs to address.


In light of this, Mr. Hunt declared that the present system of free childcare would be expanded to include infants as young as nine months old or at the conclusion of a mother's maternity leave.


In accordance with the present system, some qualified working parents of children aged three to four are entitled to up to 30 hours of free childcare per week for 38 weeks out of the year (during the academic year), with all receiving at least 15 hours.


But according to Mr. Hunt, all parents who put in at least 16 hours a week of work will shortly be eligible to receive 30 hours of childcare for kids between the ages of nine months and four.


It will be rolled out gradually. Parents of two-year-olds will be able to claim 15 hours per week as of April 2024.


Parents of infants will then be able to receive the same childcare starting in September 2024, and all children covered by the policy will be eligible for 30 hours per week starting in September 2025.


Total total value, according to Mr. Hunt, is £6.5 billion.


The parent of a kid under the age of five should not be prevented from working, he continued.


Meanwhile, parents who claim universal credit will no longer have to claim back childcare costs, receiving the money up front instead.


 

Corporation tax rise


Mr. Hunt confirmed he is moving forward with an increase in corporation tax that will take effect in April, despite warnings from a chorus of business leaders that higher taxes will slow growth.


The tax rate will increase from 19% to 25% as a result of the modification, which was first disclosed by the then-chancellor Rishi Sunak in the 2021 Spring Budget. For the Exchequer, this should result in an additional £18 billion in annual revenue.


Businesses with profits over £250,000 will be struck hard by the tax increase, while those with profits between £50,000 and £250,000 will only receive marginal relief.


No changes will be made for those who make less than £50,000 in earnings; their 19% corporation tax rate will remain the same.


Only one in ten businesses, according to Mr. Hunt, will pay the entire 25 percent rate.



 

Fuel duty


A scheduled increase in fuel taxes for this April has been postponed once more, as was previously announced.


The cost of a litre of fuel would have increased by 7p if the levy had been raised in accordance with RPI inflation, and a temporary 5p fuel duty reduction was also set to end.


The two reasons meant that the price of fuel duty was on track to increase by 23 percent, or an additional 12 cents per litre.


Mr. Hunt did, however, confirm that the temporary cut would be extended by a further 12 months and that inflation would once more be kept in check.


According to a forecast from Deutsche Bank, these two steps would cost the Treasury £6 billion.


 

Investment zones


12 new "investment zones" will be established by the government throughout the Country.


"12 new Canary Wharfs," according to Mr. Hunt, are what the government hopes to build.


There will be at least one in each of Scotland, Wales, and Northern Ireland, as well as the West Midlands, Greater Manchester, the Northeast, South Yorkshire, West Yorkshire, the East Midlands, Teesside, and Liverpool.


Partnerships between municipal governments, universities, and businesses will be in charge of them, with the goal of igniting innovation.


 

Defence budget up


In the next five years, the UK's defence spending, according to Mr. Hunt, will increase by £11 billion.


When fiscal and economic conditions permit, he added, the government will also seek to raise defence spending from the NATO minimum of 2 percent of GDP to 2.5 percent.


Also receiving additional money is the Office of Veteran Affairs.


 

New nuclear power body


Great British Nuclear is a new organisation that Mr. Hunt announced would assist energy companies locate suitable locations for nuclear power plants and build essential supply chains.


According to the energy security strategy from last year, GBN will be charged with guaranteeing that nuclear power generates 25 percent of all electricity in Britain by 2050.


In the meantime, the government will hold a public competition for small modular reactors (SMRs), in which firms like Rolls-Royce can submit their technology as contenders for financing. By the end of the year, it will be completed.


Mr Hunt also confirmed nuclear power will be classed as "environmentally sustainable" to drive investment, a key ask of companies such as EDF which are trying to attract private investment into proposed sites including Sizewell C.



 

Prizes for AI researchers


Mr. Hunt unveiled plans to increase the nation's computing capacity and promote innovation in an effort to position the UK as a global leader in artificial intelligence (AI).


Sir Patrick Vallance, the top scientific advisor, made recommendations that the Chancellor has accepted, including one to allocate £900 million to the creation of a brand-new state-of-the-art supercomputer for the UK.


The Government will work with the Intellectual Property Office to resolve AI-related issues before establishing a new "AI sandbox" to assist businesses in bringing products to market more rapidly.


It has also published a new strategy to make the UK a leader in quantum computing which will see £2.5bn ploughed into research up to 2033.

Meanwhile, Mr Hunt has created a new annual prize of £1m, which will be awarded every year - for the next 10 years - to AI researchers for the best innovations.


 

Brexit Beer boost


The Chancellor declared that in order to support "the great British pub," the duty on draught pints would be suspended. According to Mr. Hunt, the move would not have been feasible if Britain had been a member of the EU. The same will hold true for Northern Ireland.


However, after a prior freeze, drinkers will notice a 10.1 percent increase in tax on other alcoholic beverages in August to keep pace with inflation.




 

With no changes to business energy announced, get in touch to see what we can do to save you money on your next energy contract

0151 459 3388 | info@smart-energy.uk


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