Spring Budget 2023 – What you can expect
The current Chancellor of the Exchequer, Jeremy Hunt, is expected to deliver the Spring Budget on 15 March. Each budget is an outline of the government’s plans for the economy over the next few months, and there’s anticipation over what could be included this time.
With the cost-of-living crisis, rising inflation, and a potential housing market crash on the horizon, there’s a lot to consider from an economic point of view.
Read on to find out what the experts at our tax consultancy expect to see in the Spring Budget 2023.
A focus on reducing the rate of inflation
When Jeremy Hunt took to office, he said that his main focus was on the reduction of inflation. According to the Office for National Statistics, the inflation rate for the year up to January 2023 was at 8.8%, a 0.8% drop from the all-time-high rate of 9.6% recorded in October 2022.
This is still the highest inflation rate the UK has experienced for more than 30 years, so we expect the reduction of inflation to remain at the top of the priority list.
The bank rate (or base rate) has already been raised by the Bank of England in response, reaching 4% in 2023. It’s entirely possible that this will rise again or, at the very least, be maintained until inflation rates are far more on target.
Other measures may be announced in the budget to help with this, including the continued freezing of tax relief across the board.
Potential changes for business
The Chancellor has identified four pillars of growth which will be the focus of the economy during his time in charge. These are “enterprise, education, employment, everywhere”, and he will probably use these ideals to guide the majority of the changes affecting businesses in spring.
It is possible that the spring budget brings announcements of future tax cuts to incentivise new businesses settling in the UK, especially given that Corporation Tax is confirmed to be rising to 25% from 1 April.
Additionally, the energy support packages provided to small businesses is unlikely to be extended. At first glance, this is probably seen as a negative, but it might also indicate that the hugely inflated energy prices of recent months are starting to return to normalcy.
Potential changes for individuals
There might be several announced changes in regard to the management of your personal finances, too. For example, many suspect that the government have been analysing the usefulness of various tax reliefs to see if any could be justifiably removed or altered.
This speculation comes in response to the reduction of the dividend income allowance and Capital Gains Tax exemption.
One potential area they may look to target is ISAs and the tax-free status of the money held within them. For savers who have been using ISAs at the upper echelon of the £20,000 limit for many years, there may be the introduction of a lifetime cap that is similar to that of pensions to prevent the build-up of extraordinary wealth tax-free.
The Chancellor may also look to target Inheritance Tax, given that many of the available reliefs have been frozen for several years.
Incentives to reduce unemployment
Lastly, the unemployment rate in the UK is still around 3.7%. 2022 saw the lowest unemployment rate since the 70s, and it appears to be fairly stable as we move through 2023.
However, it still means that there are around 6.5 million able-bodied individuals who are out of work, with only around 25% of them actively job seeking. Much of this population are thought to be early retirees.
The Chancellor may look to incentivise a return to work for this demographic, potentially introducing tax or workplace benefits that will encourage early retirees to contribute towards the economy, especially in the healthcare sector.
He may also announce further changes to the state retirement age and accessibility to the state pension.
Looking to plan for whatever is announced?
Edwards Accountants is a leading chartered accountants in Walsall. Our services span across the West Midlands as auditors, accountants, and tax planners, so our job is to ensure your finances are in order no matter what situation you face.
Whether you’re looking for a personal tax service or for more efficient business tax planning, feel free to get in touch today. One of our experts will be on hand to respond to your query as soon as possible!
