Spring Budget 2023

March 16, 2023

Spring Budget 2023

Yesterday, the Chancellor of the Exchequer, the  Rt Hon Jeremy Hunt MP, made his Spring Budget speech.

The Spring Budget package sets out a number of  tax measures to drive enterprise through boosting investment, support  employment by incentivising work and spread the benefits of economic growth  everywhere. The Budget also announces a range of administrative changes to  make it easier for small businesses to interact with the tax system and  consultations to pave the way for future reform. There are also measures to  tackle avoidance and evasion, as well as investment in HMRC to tackle the tax  debt balance which remains above pre-pandemic levels and support taxpayers  who want to pay but need more time. Some of the key measures are detailed  below, and information on all the measures announced today can be found in  the Budget Red Book,  and in other documents from the OBR

An overview of all the tax  legislation and rates announced today is also  available. Tax Information and Impact Notes  (TIINs) contain more detail on the impact of measures  that are being legislated for in the Spring Finance Bill which will be  published on 23‌‌‌ ‌March‌‌‌ ‌2023.

It has also been confirmed that the government  will make a further set of tax administration and maintenance announcements  later in the spring at a Tax Administration and Maintenance Day. 

Key tax measures announced today include

Business Tax 

Capital allowances – full  expensing: the government is introducing full expensing.  Companies incurring qualifying expenditure on the provision of new plant and  machinery on or after 1‌‌‌ April‌‌‌ ‌2023 but before‌‌‌ ‌1‌‌‌ April‌‌‌  ‌2026 will be able to claim new temporary first-year allowances. These  allowances are: 100% first-year allowance for main rate expenditure – known  as full expensing; and a 50% first-year allowance for special rate  expenditure.

Additional tax relief for R&D intensive SMEs:  a new credit rate will be available to R&D intensive loss-making  companies whose R&D expenditure constitutes at least 40% of total  expenditure. Qualifying companies will be able to claim a payable credit rate  of 14.5% for qualifying R&D expenditure. The changes will take effect  from 1‌‌‌ ‌April‌‌‌ ‌‌‌‌2023 with eligible companies able to claim once the  Finance Bill has received Royal Assent.

Reforms to audio-visual tax  reliefs: following a public consultation, the film, TV and  video games tax reliefs will be reformed, becoming expenditure credits  instead of additional deductions from‌‌‌ ‌1‌‌‌ ‌April‌‌‌ ‌2024. The new Audio-Visual  Expenditure Credit will replace the current film, high-end TV, animation and  children’s TV tax reliefs. Film and high-end TV will be eligible for a credit  rate of 34% and animation and children’s TV will be eligible for a rate of  39%. The new Video Games Expenditure Credit will have a credit rate of 34%.

Extending the higher rates of    Theatre Tax Relief (TTR), Orchestra Tax Relief (OTR) and Museums and    Galleries Exhibitions Tax Relief (MGETR): the current rates  for these reliefs have been extended by a further 2 years. Museums and  Galleries Exhibitions relief, which was due to expire in March‌‌‌ ‌2024,  has been extended until March 2026.

Personal Tax

Pensions Life Time Allowance  (LTA) and increase to the Annual Allowance: Spring Budget  abolishes the LTA and increases the Annual Allowance from £40,000 to £60,000. These changes will take effect from April‌‌‌ ‌2023.

Rendering Void Assignment of  Income Tax Repayments: as announced on 11‌‌‌ ‌January‌‌‌‌‌‌ ‌2023,  the government will render void assignments of income tax repayments. This will be legislated for in Spring Finance Bill 2023 and ensure taxpayers can    no longer legally assign their income tax repayments to a third party such as an agent. These changes apply UK-wide and mean that assignments of income tax repayments received by HMRC on or after the‌‌‌ ‌15 ‌‌‌ ‌March    2023 will be legally invalid.

Indirect Tax

Fuel Duty: the cut in the rates of Fuel  Duty introduced at Spring Statement in March‌‌‌ ‌2022 will be extended for    a further 12 months.

Alcohol Duty: as  previously announced, the government will legislate in Spring Finance Bill    23 for a new structure for alcohol duty, based on the principle of taxation  by strength, as well as 2 new reliefs. Duty rates under the revised  structure on all alcoholic products produced in, or imported into, the UK are  being increased in line with the Retail Price Index (RPI). The new Draught  Relief is being increased from 5% to 9.2% for qualifying beer and cider    products, and from 20% to 23% for qualifying wine, spirits based and other    fermented products. These changes will take effect from‌‌‌ ‌1 August‌‌‌ ‌2023.


Extending the Payrolling Registration Service  for Benefits in Kind (PBIK) to Authorised Agents: this measure will allow authorised tax agents    to register for the PBIK service on behalf of their clients. It will ensure    that those employers, who provide benefits in kind (BiKs) to their    employees, will be able to report them to HMRC in real time through their    payroll via their agent. This will enable HMRC to simplify and modernise    the service by moving away from a paper based retrospective reporting system to a digital one that collects tax in real time.

Cash Basis Reform: the government is consulting on reforming the cash basis for the self-employed, a simplified way for over 4 million sole traders to    calculate taxable profits for income tax purposes. This consultation will    run from 15‌‌‌ ‌March ‌‌‌2023 to 7‌‌‌ June‌‌‌ ‌2023.

Transforming HMRC Guidance and Forms for Small    Businesses: the government will collaborate with businesses and representative bodies to undertake a systematic review of tax guidance and forms for small business over the    next 24 months to make it easier for small businesses to interact with the    tax system as they set up and grow.

Tax Administration Framework  Review – Modernising Income Tax Services: the government is  publishing a discussion document exploring how HMRC can simplify and modernise Income Tax services as part of its Tax Administration Framework    Review.

Customs: the government has also announced a set of customs measures focused on the simplification of customs import and export processes to reduce admin  burdens for traders has been unveiled.

Tackling the Tax Gap

A series of measures to better manage outstanding tax debt have  been announced, including investing £47.2 million in HMRC over 5 years to enable HMRC to: 
   – better tailor support for taxpayers with tax debts, by acquiring credit reference agency data to enable more timely and accurate assessments of  individuals’ financial circumstances and their ability to pay.   
   – enhance the existing 'time to pay' GOV‌‌‌.UK tool, to allow more    taxpayers to arrange payment plans online themselves.
   – temporarily boost HMRC’s debt collection capacity using private sector debt collection agencies.

Tackling Promoters of Tax Avoidance: the government will consult on the  introduction of a new criminal offence for promoters of tax avoidance who  fail to comply with a legal notice from HMRC and on expediting the    disqualification of directors of companies involved in promoting tax  avoidance including those who exercise control or influence over a company.

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