UK Budget 2023: Key Highlights

The Chancellor of the Exchequer, Jeremy Hunt, has delivered his Budget 2023 speech. The main announcements affecting businesses are:

Business Tax

  • The main corporation tax rate will increase from 19% to 25% from 1 April 2023.
  • Super-deduction regime will end on 31 March 2023, and will be replaced with ‘full expensing’ – 100% capital allowances for qualifying plant and machinery.
  • 50% first-year allowances for ‘special rate’ plant and machinery, including long life assets.
  • 100% first-year allowance for qualifying expenditure on electric vehicle charge-point equipment will be extended until 31 March 2025 for corporation tax, and 5 April 2025 for income tax.
  • Higher rate of relief for loss-making R&D intensive SMEs will be introduced from 1 April 2023.
  • Two new categories of qualifying R&D expenditure will be created, for data licences and cloud computing services.
  • The Government has announced 12 Investment Zones across the UK, with each English Investment Zone having access to £80m over 5 years.
  • Large multinational businesses operating in the UK will be required to maintain a master file and a local file in a prescribed and standardised format.
  • Creative industry reliefs for films, TV and video games will be reformed, and new Audio-Visual Expenditure Credits and Video Games Expenditure Credit will be allowed.
  • Temporary higher rates of Theatre Tax Relief, Orchestra Tax Relief, and Museums and Galleries Exhibitions Tax Relief will be extended for 2 years.

Personal Tax

  • No changes to previously-announced personal income tax and National Insurance Contribution thresholds or rates.
  • Significant reforms to pension taxation were announced, including reducing the lifetime allowance for pension contributions and removing the annual allowance taper for those with adjusted income above £200,000.

Other measures announced in the Budget include:

  • £27bn for public transport over 5 years, including £15bn for local transport and £7bn for cycling and walking.
  • £6bn over 5 years to improve broadband and mobile connectivity.
  • A new Help to Build scheme to provide equity loans to help people build their own homes.
  • The introduction of a new £10m Community Ownership Fund to support community groups in taking over local assets such as pubs, sports clubs, and theatres.
  • Additional funding for the NHS, including £5.9bn for the backlog of elective procedures and £5.5bn for mental health.
  • A new £4.4bn Health and Social Care Levy to fund social care reform, with the levy being paid by employees, employers, and the self-employed.

Overall, the Budget 2023 has focused on investment and economic growth, with a number of measures aimed at supporting businesses and individuals. The introduction of the Health and Social Care Levy has been the most significant announcement, with the aim of addressing the long-term funding of social care in the UK.

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