Spring Budget 2023: What can we expect?
There is no denying that the Chancellor's Autumn Statement speech last November was a gloomy affair, but with public finances in better shape than first thought, can we expect any significant announcements on Wednesday 15th March?
As the economy starts to recover, we take a look at five key areas and what the industry believes the budget might hold for each of them.
Personal taxes
The upcoming Budget should be fairly uneventful for investors, policies previously announced are unlikely to be softened or reversed.
Prevously announced reductions to the annual dividend income allowance and capital gains exemption.
Inroducing an overall cap for ISAs, similar to the lifetime allowance.
Removal of reliefs with low uptake such as Investors relief from CGT.
IHT reliefs unlikely to be increased, but could be simplified.
Changes to capital gains tax rules for gifts of business assets.
Changes to the high Income Child Benefit Charge, the £50,000 higher earner threshold has not changed since 2013.
Unlikely that VAT-free shopping for tourists visiting the UK will be re-introduced.
Energy and fuel
Ongoing support for economic pressures related to the cost of living crisis.
The current Energy Price Guarantee (EPG) has kept bills for the average home capped at around £2,500 a year.
The EPG is set to expire in April 2023, when it will rise by 20% to around £3,000.
The Chancellor is expected to extend the programme at the £2,500 level for a further three months.
A planned rise in fuel duty is likely to be suspended.
The current fuel duty relief of 5p per litre is likely to be extended for another year.
Public sector pay
To bring an end to the continual flow of strikes that are plaguing public services.
The Government has said it could afford a 3.5% rise in public sector salaries.
Last year, average public sector pay settlements were 5% which was less than half the rate of inflation.
The inflation averages at 4% this year as forecast, a 3.5% rise would still result in a fall in real salaries.
Negotiations are likely to continue beyond the budget.
Childcare
Getting more people back into employment, including young people, new parents and retirees.
Currently no support offered for children aged 1 and 2 before free nursery hours for 3 and 4 year-olds.
The Confederation of British Industry has called for free hours to be extended.
Any reforms in childcare are likely to be considered too expensive for the chancellor to tackle however.
Pensions
Getting early retirees back to work.
The confirmed increase to the state pension age could be brought forward.
Currently, the age at which you can access your state pension is at 66.
This is set to gradually increase to 67 by 2028, before gradually increasing to 68 between 2044 and 2046.
A potential increase to or reform of the lifetime allowance, now set at £40,000.
A potential increase to the money purchase annual allowance (MPAA).
We will be monitoring the Spring Budget as it happens and will be sharing our updates and interpretations with you in our first monthly newsletter.
