20 March 2023
“Got to be applauded”: Our tax experts review the Spring Budget
Topics:
Budget
Services:
Personal Tax Planning,
Tax Reliefs including R&D
While many of the Spring Budget’s biggest announcements were quietly touted beforehand, Chancellor Jeremy Hunt still had a few surprises up his sleeve.
In his Spring Budget, the Chancellor declared his ambition to make the UK the most “pro-business, pro-enterprise tax regime anywhere”.
The Budget outlined a number of new policies to boost growth, including more support with childcare costs, a “full expensing” tax break and a “refocused” Investment Zones programme.
Four key points from the Spring Budget
We sat down with our team of tax experts at Haines Watts to find out which announcements got them talking – and which weren’t as impressive.
Watch the full video below:
1. Abolishing the lifetime pension allowance
The headline-grabbing announcement was the decision to remove the lifetime allowance charge from April 2023 and abolish it entirely from April 2024. The annual pension allowance will also be increased from £40,000 to £60,000 per year.
The general belief is that the abolishment of the lifetime allowance is aimed at bringing more high-level doctors back into the NHS. As Nicola Goldsmith, Head of Private Client at Haines Watts, noted:
“Any doctors you can bring back into the NHS to help out is fantastic. Anything you can do to help save lives or have more operations can only be beneficial for the country at large. But on the whole, I would say that obviously this doesn't tackle the shortage of nurses or anything else like that.”
Read more: Analysing the impact of the Budget’s Lifetime Allowance announcement
2. Improved relief for R&D intensive firms
After the Autumn Budget made significant cuts to R&D tax reliefs for SMEs, the Spring Budget brought good news for research-intensive firms. Those that spend 40 percent or more of their total outgoings on R&D will soon be able to claim back £27 on every £100 spent.
Sara Andrews, Tax Partner for Incentives & Reliefs at Haines Watts, said:
“The support from the relief for smaller, R&D-intensive businesses will hopefully offer confidence for those organisations to press ahead and push the boundaries of their respective industries. That being said, we’re hoping for further clarity from the government on what this will actually look like in practice and who will reap the rewards of the support.”
Read more: What the Spring Budget means for R&D and innovation
3. The introduction of “full expensing”
With the planned increase in corporation tax moving full steam ahead in April, the Chancellor moved to soften the impact with his “full expensing” announcement. Full expensing will allow firms that invest in IT equipment and machinery to claim back up to 100 percent of the cost by writing it off against tax on their profits.
However, Haines Watts Partner David Fort described the policy as “underwhelming” compared to the previous super-deduction allowance.
“The full capital expensing relief is actually not as good as what we've already got. So it’s give with one hand and take away with the other. Is that really going to get people to invest in their businesses? Not really, because it’s not as good as what we’ve had previously,” he said.
Read more: The Budget’s “full expensing” measure to drive business investment
4. Investment Zones across the UK
One of the most welcome announcements in the Spring Budget was a £400 million pledge for 12 “Investment Zones” to drive business investment and levelling up.
Eight places in England have been shortlisted to develop proposals in collaboration with the government: East Midlands, Greater Manchester, Liverpool, the North East, South Yorkshire, the Tees Valley, the West Midlands and West Yorkshire. Four Investment Zones will also be delivered in Scotland, Wales and Northern Ireland.
David Fort is based in our Manchester office and praised the move:
“We haven't seen the details yet, so we’ll have to see in due course what that actually means for clients in reality. But £80 million of investment into Manchester and Liverpool has got to be something that is applauded. It gets some of the devolution moving a bit further north than being stuck in Westminster.”
Read more: The Spring Budget highlights for SMEs, from creative relief to alcohol duty freeze
View our detailed guide to the Spring Budget
Read our comprehensive guide to the Chancellor’s “Budget for Growth”, covering the latest announcements on personal tax, employment, business and capital taxes.
Want to discuss what the Spring Budget means for your business? Find your nearest Haines Watts office or send us a message on our contact page.
