Spring Budget: How does it apply to me?

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Well it hardly feels like spring, and this budget wasn’t one to necessarily warm the heart, but we were expecting the budget not to rock the boat, and other than a few well discussed items ahead of the budget being released, other things have continued.

Our Bev will be relieved she doesn’t need to update the details on her blog here, in terms of the rates for income tax and corporation tax, however it is a little disheartening that funds have perhaps been used in less useful areas for our small business owners who are valiantly keeping the economy moving.

So the run down of the key areas are:

Full Expensing:

What does this mean for me?

If you’re a business owner and have plans to investment in plant and machinery in the next year, then full expensing means that if it’s an asset such as a machine, a vans (not cars), furniture,

They need to be new, and must be a limited company, can’t have been bought to lease to someone,

If you buy things such as lifts, escalators, water heating systems, aid conditioning, hold and cold water systems, electrical systems (including lighting) then these will all be classed as ‘integral’ and you will only be able to claim 50% of the cost of these in year one, and then 6% thereafter each year until its not got a remaining value.

How has this changed?

However none of this is relevant if you’re not investing over £1million in new kit, as this will be covered by the Annual Investment Allowance.

Super deductions are going from the 31 March as we expected, this meant for every £100 you spent you were entitled to £130 of relief.

It will be fantastic for those with a budget of >£1m mind on capital expenditure. But as always with tax, the devil will be in the detail!

R&D:

With R&D being focused on and under immense scrutiny, quite correctly, I’m also pleased to see some relaxation in the support given for SME’s !

What does this mean for me?

The introduction of enhanced credit means that those SMEs that are loss making, or where a business spends 40% or more of their total expenditure on (qualifying) R&D the claim credit will be upped to £27 for every £100 spent.

Not as good as the original £33 per every £100 spent, but creeping back up to that level, and better than non-R&D intensive SMEs that will only be able to claim £18.60 for every £100! The intensive R&D calculation however does make our Bev concerned about the level of manipulation of numbers to get to these numbers to benefit from this enhancement, so we will are very likely to see a continued increase in scrutiny on these cases.

Also on R&D the restriction on overseas subcontractors, will be implemented from 1 April 2024, rather than 1 April 2023.

Pension

Although discussed in the run up, although surprising, the lifetime allowance – the total amount workers can accumulate in their pension savings before paying extra tax – has been abolished. Mr Hunt hopes it will stop 80% of NHS doctors from receiving a tax charge.

What does this mean for me?

If you had added to your pension pot, and thought you had contributed all you can, well now you may be able to contribute more.

Also instead of an annual cap of £40k pension contribution allowed to be made without triggering a tax charge, this has now been increased to £60k. This will make an efficient way to extract money out of your business, although we appreciate it will not be available to all.

Childcare

Following our Bev’s discussions as part of International Women’s Day, she was having discussions surrounding can ‘women have it all’ triggered by BBC’s post surrounding Ardern, and a huge part she discussed was ensuring as a country we invest in our childcare services to prevent breadwinner or childcare giver as a question out of fact, and that this would then enable more family choices to be made. And well, Jeremy Hunt listened.

What does this mean for me?

If you have children, or planning on having children, here are the plans:

  • Parents – working 16 hours a week – of children aged nine months to five years will get 15 hours free childcare to encourage caregivers to enter the workforce.
  • This will be staggered from April 2024 to ensure enough places. Children up to two years old will get 15 hours free from April 2024, children from nine months up will benefit from September 2024, and from September 2025 every single working parent of a child under five will have access to 30 hours free childcare per week.

Other note worthy items

• Tax relief of 11p has been announced on draft drinks served in pubs from 1 August – so a pint will be cheaper than in supermarkets.

• An extension of the 5p cut in fuel duty, at a cost of £6bn, has been announced for a year. Fuel duty will also be frozen for the next twelve months.

• As expected, the government is extending the energy price guarantee (EPG) which keeps the average household bill at £2,500 until the end of June by capping the unit price of electricity. The typical bill was due to rise to £3,000 from 1 April. Under the EPG the government effectively caps household costs and reimburses energy companies for the difference between that, and the cost of buying power on wholesale markets.

• The energy rebate scheme – paid direct to customers in six instalments of £66 and £67 a month – has not been extended and will end this month.

• The so-called “prepayment premium”, whereby those using prepayment meters are charged more for their gas and electricity, will be scrapped from July

• Apprenticeship style programmes, called ‘returnerships’ will be targeted at over 50s to learn new skills and return to work.  

• Changes to the Self Assessment tax return forms to ensure that cryptoassets to be separately identified are being made.

• Tax breaks for the UK film and TV industry, from January 2024, film and TV expenditure credit will be raised from 25% to as much as 34%.

• The current headline rates of relief for Theatre Tax Relief (TTR), Orchestra Tax Relief (OTR) and Museums and Galleries Exhibitions Tax Relief (MGETR) are being extended for two years.

More detail:

A more detailed report will be available in due course when the details land, but please get in touch if you have any questions.

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