With the International Monetary Fund (IMF) predicting that the UK economy will be the worst performing of any G7 nation in 2023, all eyes were on Jeremy Hunt’s first Spring Statement on Wednesday 15th March 2023.
We’ve put together a summary the key announcements from the Budget that affect UK business owners and their employees.
While the Autumn Budget is usually used to announce major policy change and the Spring statement is more of an update for the public, it is often used to provide a preview of any policy changes that may be forthcoming.
In his first statement as Chancellor in November, Jeremy Hunt overturned most of his predecessor Kwasi Kwarteng's September mini-Budget. It directly addressed the economy with ambitions to halve inflation, boost the economy (by generating better-paid employment), and reduce the UK's national debt.
The Office for Budget Responsibility forecast that the British economy is set to avoid a technical recession in 2023 but will contract by 0.2% before returning to growth in 2024. Jeremy Hunt’s budget focused on prompting those who have left their jobs to return to the workforce and boosting business investment.
The chancellor confirmed that the rate of corporation tax on company profits will rise from 19% to 25% from 1st April 2023. The rise applies for companies with profits in excess of £250,000 in profits. According to Hunt, only 10% of businesses would pay the full rate; companies with profits between £50,000 and £250,000 will pay tax at the main rate reduced by a marginal relief providing a gradual increase in the effective Corporation Tax rate.
If you are interested in spreading the cost of your corporation tax bill over time to retain capital and enable you to manage your budget more effectively, a corporation tax loan could be the solution.
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Companies will be able to deduct investment in new machinery and technology to lower their taxable profits.
This new scheme will allow every pound invested by businesses in IT equipment, plants or machinery to be deducted (in full) from taxable profits, meaning companies will have to pay lower amounts of corporation tax.
Hunt stated that the policy was equivalent to a corporation tax cut worth an average of £9bn a year and would lead to a 3% increase in business investment a year. The policy would be in place for three years initially but might be made permanent in the future.
If you are considering investing in machinery or technology for your business, you may be able to spread the cost over time via an asset finance solution, retaining much-needed cash in your business.
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