March 2023: The Spring Budget
Jeremy Hunt delivered his second statement as Chancellor of the Exchequer with a Budget focused on growth and the structural issues within the UK economy. The issues he addressed included labour participation, business investment, innovation and productivity.
Frozen Allowances – The £20,000 ISA Allowance, £9,000 Junior ISA and £5,000 Starting Rate for savings remain frozen at their current levels. Personal allowances, income tax rates and taxable bands also remain the same as announced in the Autumn budget. Individuals with taxable income above £125,140 after 6thApril 2023, will be taxed at the additional rate (45% income tax).
Pension Annual Allowance – Following consultation with higher-earning public sector employees in defined benefit pension schemes, the Annual Allowance is to be increased from £40,000 pa to £60,000 pa from 6th April 2023.
Pension Money Purchase Annual Allowance (MPAA) – The MPAA, that limits the amount that people can contribute into a pension tax-free after accessing flexible income, will increase from £4,000 pa to £10,000 pa from 6th April 2023.
Tapered Annual Allowance – The adjusted income threshold for the Tapered Annual Allowance will increase from £240,000 to £260,000 from 6th April 2023. The Tapered Annual Allowance will also increase from £4,000 pa to £10,000 pa from 6th April 2023.
Pension Lifetime Allowance – The £1,073,100 Lifetime Allowance will be completely scrapped from 6th April 2023.
Tax-Free Cash Cap – Despite the Lifetime Allowance being scrapped, there will be a new cap on the maximum amount of tax-free cash at £268,275. Any remainder over this cap will be able to be taken as a lump sum but will be taxed at the marginal rate.
Energy Price Guarantee – The energy cap is set to be extended for 3 months until July, remaining at £2,500 for a typical household, providing an average saving of £160.
Employer National Insurance & Corporation Tax – Employers will pay 13.8% on employee earnings over £9,100 pa (£758 pm). The Chancellor also confirmed the rise of Corporation Tax from 19% to 25% on taxable profits over £250,000.
Childcare – Aimed at removing the barriers to work for parents with children under 3, the government will provide up to 30 hours per work of free childcare for every child over the age of 9 months with working parents by September 2025.
Nuclear Energy – Nuclear energy is set to be classed as ‘environmentally sustainable’ for investment purposes and will benefit from the same incentives as renewable energy.
If you wish to talk over any of the Autumn Statement changes and how they may impact on your position, please feel free to contact your adviser at any time.
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INFORMATION IS BASED ON OUR CURRENT UNDERSTANDING OF TAXATION LEGISLATION AND REGULATIONS. ANY LEVELS AND BASES, OF AND RELIEFS FROM TAXATION, ARE SUBJECT TO CHANGE.
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