Spring Budget Hub 2023

Spring Statement 2023

Tax incentives for investment and new ‘returnerships’ are a winning combination for UK business

Chancellor Jeremy Hunt’s Spring Statement has delivered on two fronts – more tax incentives for business investment and a potential solution to current skills shortages, with a new programme of ‘returnerships’ designed to get over-50s back to work.

Hospitality & Leisure

The Chancellor announced some measures to support employment which may help to remove barriers to work and tackle labour shortages. Draught Relief has been increased, so that from 1 August the duty on draught products in pubs will be up to 11p lower than the duty in supermarkets. Additional funding has been announced to help support public leisure centres and pools.

Laura Madeley - Menzies Accountant

Laura Madeley, Director, Accounts & Advisory comments:

“The measures to support employment may help the Hospitality and Leisure sector find and retain staff more easily in the coming years however are unlikely to have an immediate impact on the current workforce challenges being faced by the industry. Further support for household energy bills was announced but unfortunately the sector did not see the business energy support it had hoped for.”

Transport & Logistics

The chancellor announced some measures in the budget which will be welcome news to the transport and logistics sector having endured huge operational challenges over the last few years.

Stability is what is needed and news that fuel duty is to remain frozen will be a welcome relief for companies especially with inflation being so high.

The announcement to introduce full capital expensing for the next 3 years on main pool equipment will be a valuable planning tool to help reduce the exposure to the 25% corporation tax rate. It will help encourage transport and logistics companies to allocate potential funds to future investment on things such as cleaner vehicles. 

Finally, it will be interesting to see what changes come out of the proposed discussions with stakeholders which are taking place later this year to help try and simplify customs and declaration processes for both import and exports.  The review will have a particular focus on export declarations, as well as on ensuring that customs declarations do not impose disproportionate burdens on small and less experienced UK businesses.  The programme will also look at transit simplifications, modernising authorisations and changes to guarantees for certain procedures.  HMRC will work with stakeholders on timeframes for delivery.


Capital allowances

The Chancellor announced a new policy of ‘full capital expensing’ for the next three years, with a commitment to continue the policy when it is possible to do so. This means all companies investing in IT, plant or machinery will be able to offset 100% of their expenditure against tax payable on their profits for the next three years.

Richard Godmon - Menzies Accountant

Richard Godmon, Tax Partner comments:

“The removal of the super-deduction would have left a significant hole and could have ended up discouraging business investment. The Chancellor has recognised this, and plugged the gap with a new policy, which is effective from the start of April for a period of three years. This is on top of AIA at £1m, which will support unincorporated businesses, including larger partnerships and LLPs, who will be disappointed not to be eligible for full expensing.”

R&D tax relief for smaller businesses

The Chancellor announced additional tax relief for R&D-intensive SMEs, from April 2023. Loss-making R&D-intensive SMEs who spend at least 40% of their total expenditure on R&D will qualify for a higher rate of relief.

In addition there will be a delay to restrictions on overseas expenditure qualifying for R&D tax reliefs with the previously announced restriction on some overseas expenditure now coming into effect from 1 April 2024 instead of 1 April 2023.

Anthony Lalsing - Menzies Accountant

Anthony Lalsing, Innovation and R&D Tax Partner comments:

“After the last two budgets failed to deliver on the Government’s statement that they want to strengthen the UK’s position as a global science and technology power. There was finally some good news in the Spring Budget with additional R&D tax relief for R&D intensive SMEs as well as overseas R&D costs continuing to qualify for at least another year. While this did not mark a full return to the generosity of previous R&D tax reliefs, it at least provides some comfort for SMEs looking to fund valuable ongoing R&D projects”.

Back-to-work incentives

The Chancellor announced new ‘returnerships’ providing flexible skills training for the over-50s, which takes account of previous experience. This new programme will run alongside existing skills boot camps and sector-based work academies.

Richard Godmon - Menzies Accountant

Richard Godmon, Tax Partner comments:

“Flexible skills training for the over-50s is intended to help tackle the productivity gap by getting people with the right skills or experience back to work. As well as helping to address skills gaps, It will also help to boost the tax take further of course – a win-win for the economy for the Government in its bid to lower the budget deficit.”

Life sciences and creative businesses

The Chancellor is backing his vision to turn the UK into a new silicon valley and is launching a new AI Sandbox to encourage more research activity using AI systems in addition to a new £1m prize, called The Manchester Prize, which will be awarded each year for ground-breaking AI research.

Richard Godmon - Menzies Accountant

Richard Godmon, Tax Partner comments:

“It is good to see the Chancellor recognising the importance of the technology sector and focussing on innovation in his speech. There appears to be a clear desire to provide an eco-system to develop world-leading technology. It is important that this desire is backed up with a clear and consistent tax incentivisation structure to encourage such businesses to grow and develop in the UK.”

Lifetime pension allowance abolished

The Chancellor has gone much further than expected by abolishing the lifetime allowance for pension payments altogether.

Craig Hughes

Craig Hughes, Private Client Tax Partner, comments:

“This is a much-needed solution to a broken system that discouraged people from continuing to work in their later years because they were unable to pay as much as they would like into their retirement pots. This disincentive for high earners to keep working for longer has been addressed, and people are now free to save as much as they like for their retirement, whenever they like.”

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