Spring Statement 2023

So here we are, the Spring Statement. It feels like just the other day when the Autumn Budget was announced and the Chancellors were playing musical chairs.

But, alas, back to the present we go. The Spring Statement is an annual announcement made by the Chancellor of Exchequer regarding the financial health and future plans of the economy. This year’s Chancellor is (currently) Jeremy Hunt. 

On 15th March 2023, Hunt announced his financial plan to help to stabilise our economy amidst rising inflation, the cost of living crisis, pandemic ripple effects, and general government inconsistency (not to mention the effects of the war in Ukraine). It all almost sounds made up😅 

One thing is clear – Hunt can’t wait to get millions of people back into work. So that’s the theme of this year’s Spring Statement. Let’s get into all the changes that were announced. 

What are the tax-specific changes?

Here’s the gist of it. 

From April 6th, the new tax year:

• The Capital Gains Tax allowance is being halved from £12,300 to £6,000
• If you earn £125,140 or more, you now pay 45% Income Tax (the highest one)
• The Dividend allowance is being halved from £2,000 to £1,000
• Inheritance Tax, Income Tax and National Insurance thresholds are staying frozen 

The Autumn Budget 2022 covered it in depth, so head there to read more. 

Corporation Tax

The Corporation Tax rate is rising from 19% to 25% for those with businesses earning over £50,000 a year. 

If you earn less than £50,000 you’ll continue to pay the 19% tax rate, woop!

Sunak introduced the ‘super deduction’ tax break for companies in 2021. For every £1 invested, your tax is cut by up to 25p.  However, it’s been replaced by a 3-year tax break, so now businesses can offset 100% of their investments against their profits (previously 130%). Hunt hopes to make this change permanent eventually – we’ll believe it when we see it!

Returning to work

Hunt said that there are plans to get the early retirees, over 50s, back to work. Apparently, 6.6 million working-aged adults aren’t working right now for various reasons. Personally, we don’t see an issue with retiring early (get your money up, people!) but Hunt and the rest of the government are keen to get you back into the office. Sorry about it!

Returnerships, training programs, and more resources will be available to those looking to go back to work, so age or qualifications won’t hold you back. 

Piggybacking on this, Hunt also introduced a policy to help people who suffer from long-term illnesses or disabilities enter or reenter the workforce with extra support. And without the fear of having your benefits cut. The government are getting rid of the capability assessment and won’t link your benefit entitlement with your ability to work.

Energy bills support

The Chancellor confirmed that the threshold on the Energy Price Guarantee, which aims to cap energy bill costs within households, is remaining at £2,500 for three more months. 

The cap will be lifted from July when energy prices are estimated to come down.

Fuel Duty cuts

There’s currently a 5p fuel duty cut on petrol. It was announced last March by Sunak (yep, the current PM) and ends this March.

Luckily, Hunt has extended the freeze for another 12 months, so the fuel duty cut will stay in place for a little while longer. Good thing too, because without it the price of petrol would’ve increased by an extra 12p per litre. City bikes, anyone? 🚴‍♂️

Pensions

The annual tax-free pension allowance increased from £40,000 a year to £60,000, allowing people to contribute more within the year.

Hunt has completely scrapped the lifetime pension allowance. He hopes this will discourage early retirement (we see the pattern, Mr. Chancellor), especially from NHS doctors.

Childcare 

Finally, help to parents is on the way! 

There’s a new policy to make free childcare for parents of children under 5 years old. Parents who work at least 16 hours a week, and fit other criteria no doubt, will be able to access at least 15 hours of free childcare for ages 9 months and up👇

Also, parents claiming universal credit (UC) can now claim more per child per month. Previously, parents on UC could claim £646 a month for one child and just over £1,000 for two. 

Now, parents get £951 a month for one child or £1,630 for two, upfront instead of having to claim the money back. The hope is that this change allows parents to return to work without the stress and worry of the cost of childcare – as if being a parent isn’t already a full-time job…

Spring Statement 2023 – check ✅

There we have it, the plan our government has to keep us financially stable for the next year. Let’s see how it goes, shall we? Hold onto your hats, everyone!