Accountants Chester – Spring Budget
Accountants Chester – Tax Highlights
- Pension contributions lifetime allowance scrapped
- Annual allowance for pension contributions increased from £40,000 to £60,000
- Fuel duty frozen
- 100% ‘full expensing’ tax relief from 1 April
- Corporation tax hike will go ahead
- Twelve new ‘Investment Zones’ to drive business investment
- Alcohol duty to rise with inflation
- Duty on average strength draught beer sold in pubs to be frozen
Accountants Chester – Back to Work
Jeremy Hunt’s 2023 Spring Budget had a strong focus on ‘back to work’ initiatives and economic growth, whilst being light on tax cuts.
Measures to stimulate growth included increasing the annual allowance for pension contributions from £40,000 to £60,000, and abolishing the pensions lifetime allowance in a hope to encourage older workers to stay within the workforce.
The so called ‘back to work’ Budget is aimed at discouraging workers over 50 from retiring early by increasing the cap on the annual allowance for pension contributions and removing the lifetime allowance for all. One group of workers targeted by the budget are senior NHS doctors and consultants.
Businesses that were hopeful of a reversal of the proposed Corporation Tax increase, from 19% to 25%, were left disappointed. In an aim to soften the blow, the Chancellor replaced the super deduction scheme with a 100% full expensing tax relief for the next three years. The new scheme provides 100% full expensing for the next three years, with a view to making it permanent, and will apply to plant, machinery and IT equipment.
“The impact on the economy will be huge,” said Mr Hunt. “The office of budget responsibility (OBR) says it will increase business investment by 3% every year it’s in place and gives us the most generous capital allowance regime of any advanced economy.”
The Chancellor went on to say that the 100% “full expensing” tax relief will reduce businesses tax by up to 25p for every £1 they spend on plant and machinery.
The Chancellor also announced twelve new investment zones with shortlisted locations including West Midlands, Greater Manchester and Liverpool. Each of these zones will receive £80m over five years and will benefit from tax and custom incentives.
The Chancellor did perform a partial back-track on his decision in the Autumn Statement to cut R&D tax credits by restoring the relief with an “enhanced credit” with certain restrictions in place.
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