What does the Chancellor’s Spring 2023 Statement mean for businesses?
The Chancellor Jeremy Hunt delivered his spring statement on Wednesday (15 March 2023). His speech centred around the four key words of employment, education, enterprise and everywhere, but what does it mean for your business?
First of all, the Chancellor reported that the UK is expected to avoid a technical recession (which is two consecutive quarters of decline) in 2023, according to the Office for Budget Responsibility. Inflation (the rate of price rises) is forecast to fall from 10.1% currently to 2.9% by the end of this year.
Here is a summary of some of the key points from the Chancellor’s announcement:
- Fuel duty will be frozen and a 5p reduction will be maintained for a further year.
- Corporation tax to increase from 19% to 25%. Companies which make a profit of more than £250,000 will pay 25% tax on their profits from April. Only 10% of companies will pay the full 25% rate.
- Full expensing to be introduced from 1 April 2023 until 31 March 2026. This means that every pound a company invests in IT equipment, plant or machinery can be deducted in full and immediately from taxable profits. It will offset the increase in corporation tax.
- The Annual Investment Allowance will increase to £1m, meaning 99% of all businesses can deduct the full value of all their investment from that year’s taxable profits.
- For every £100 spent on Research & Development (R&D), eligible businesses will be able to claim £27 back to helping them to invest in more R&D.
- The Climate Change Agreement scheme to be extended for two years to allow eligible businesses £60m of tax relief on energy efficiency measures.
- For the next 10 years, there will be an annual prize of £1m for AI research.
- 30 hours of free childcare for every child over the age of 9 months, with support being phased in until every eligible working parent of under 5s gets this support by September 2025. The provision will only apply within term-time.
- A new ‘Returnerships’ apprenticeship targeted at the over 50s will refine existing skills programmes to make them more accessible to older workers, giving them the skills and support they need to find a recognisable path back into work.
- 12 new Investment Zones announced. These will be spread across the West Midlands, Greater Manchester, the North East, South Yorkshire, West Yorkshire, East Midlands, Teesside and Liverpool.
- The government will consult on transferring responsibilities for local economic development currently delivered by Local Enterprise Partnerships to support local economic development to local authorities from April 2024.
Andrew Finley, Project Director at Access to Finance, provides his overview of the budget announcement:
“Whilst there are some welcome initiatives, there is little of immediate help to SMEs struggling with energy costs, inflationary supply chain and wage bill pressures. Consumer spending is being squeezed and so the next two years are going to be challenging. That said, economic adversity always presents new opportunities and there are bound to be businesses who grow through the exploitation of new market initiatives. In this environment, whether your need is for working capital to support growth or for business stability, Oxford Innovation Advice is here to help, so contact us today.”
The Access to Finance programme is designed and delivered by Oxford Innovation Advice. For free and impartial support, contact the Access to Finance team via firstname.lastname@example.org or call 01872 300386.
You can find more information on the Chancellor’s spring statement on the gov.uk website.