Jeremy Hunt is due to deliver his Spring Budget on 15 March 2023 and there has been a lot of speculation about what is going to be announced. One thing we can be sure of is that tax cuts aren’t likely to be on the agenda.
We have compiled a list of ten potential policy announcements that could be made.
Tax Cuts Out, Increases In
The Chancellor’s plan is to reduce borrowing costs and inflation by carefully increasing taxes and managing inflation. So while tax cuts are unlikely, we may see more ‘stealth measures’, like the freezing of allowances and removal of tax relief opportunities.
Ten Potential Policy Announcements
- Basic rate of income tax remains unchanged at 20%.
- Fuel duty may be frozen to mitigate cost of living increases.
- State pension age may be increased to 68 by 2025/2026.
- Corporation tax will increase to 25% from 1 April 2023 for all companies with profits over £50,000. To control the departure of multinational businesses, the government may unveil a long-term rate reduction policy.
- The capital allowances super deduction is due to finish in April 2023, and R&D tax credits for SMEs are being restricted. A new tax relief policy and replacement to incentivise business investment may be unveiled, potentially linked to the corporation tax changes.
- The government may unveil a policy related to ‘corporate re-domiciliation’ to encourage incoming business investment into the UK.
- To incentivise international start-ups, the government could duplicate a policy offered by some European countries to offer fixed period tax breaks to new international businesses.
- The Spring Budget could unveil a new HMRC programme to increase investment in enforcement to respond to the loopholes in the beneficial ownership register designed to identify the ultimate owners (and beneficiaries) of residential property in the UK.
- The Chancellor may introduce a lifetime limit to the amount of money that can be held in a savings ISA, similar to the limits imposed on pension investments.
- The flat rate of tax that non domiciled residents of the UK are required to pay may increase.
The Chancellor Needs to Proceed with Caution
The various fiscal policies announced over the past 12 months, including those unveiled by Kwasi Kwarteng, have had a rather negative impact on the UK economy. The measures introduced should be aimed at boosting the country’s flagging economic growth and encouraging investment, both locally and from overseas.
We will be monitoring the Spring Budget as it happens and sharing our updates and interpretations with you. If you’re subscribed to our newsletter, you will receive our initial thoughts the following day. If you’d like to receive our latest updates and insights, you can sign up to our newsletter here.
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