Spring Budget 2023

Scroll down for CIOT Budget reaction

Key points from the Budget

• The UK is expected to avoid a recession this year but will experience a contraction of 0.2 per cent in GDP in 2023
• The corporation tax rate will increase from 19 per cent to 25 per cent from April as planned. However, the Government will introduce full capital expensing, allowing companies to deduct all of their spend on IT equipment, plant and machinery from their tax bills in the year of investment
• A new tax credit will be introduced for small and medium-sized firms that spend at least 40 per cent of their expenditure on research and development (R&D)
• The Government has confirmed the establishment of 12 new Investment Zones
• From 1 August, duty on draught products in pubs will be 11p lower than in supermarkets
• The Government will boost mayors' financial autonomy, starting with West Midlands and Manchester, which will be allowed to retain 100 per cent of business rates
• Tax reliefs of 45 per cent and 50 per cent have been extended for theatres, orchestras and museums
• The energy price guarantee has been extended, providing greater stability for consumers
• The Government will expand free childcare for working parents in England to cover one and two-year-olds, as well as, increasing the amount of childcare support available to people on Universal Credit
• Fuel duty will not be increased, with a 5p cut to be maintained for a further 12 months
• The pension lifetime tax-free allowance will be abolished, while the annual allowance will increase by 50 per cent from £40,000 to £60,000. 
• There will be a range of measures to tackle promoters of tax avoidance schemes

Spring Statement documents

Spring Budget 2023 (PDF)
Policy Costings Document (PDF)
Policy decisions spreadsheet (Excel)

CIOT Budget reaction 

Capital expensing - CIOT has welcomed the announcement that the Government will introduce full capital expensing, but said that doing so for just three years initially will create some uncertainty for business which is unwelcome. On R&D changes CIOT said merger of the two schemes would be a simplification but only if it happens at a single rate.

Tax simplification – CIOT has cautiously welcomed a number of Budget measures aimed at simplifying the tax system but said that retaining the Office of Tax Simplification (OTS) would have been a more effective way for the Government to demonstrate a commitment to tax simplification.

Making tax digital - CIOT and ATT believe that the programme’s benefits might have begun to flow more quickly if the Government had consulted earlier and worked more closely in partnership with stakeholders.

Crypto assets - CIOT has welcomed changes announced in the Budget which will separately identify crypto assets in self-assessment tax returns’ capital gains tax pages from 2024.

Pension tax-free allowance - the abolition of the pensions lifetime allowance will make work pay better for wealthy pensioners and near pensioners. Some might respond to that incentive. But it would also seem to remove a check on high income people getting tax relief at 40% or 45%, to build up a pension pot beyond their needs, and passing it on free of inheritance tax. Pensions relief is very costly - more so after this Budget, and needs fundamental and consultative redesign, considering its social purpose, not flip-flop tinkering.

Business rates reform - We are pleased to see that, following consultation on the admin processes needed to achieve a 3-yearly revaluation cycle, the new duty to notify the Valuation Office Agency of occupier and property information (eg when rent changes or an occupier starts/stops occupying a property) will now be a longer period of 60 calendar days, as we called for, not the 30 calendar days originally proposed. The new annual confirmation of property details will also be 60 days from 30 April each year instead of 30 days. (See: HMT summary of responses) 

Fuel duty – Chancellor has spent £10bn over 3 years on extending the fuel rate cut and (again) not indexing the duty. This raises some questions. If the government is determined never to raise fuel duty, why does it budget on the assumption that it will? And what will replace that assumed contribution to ‘balancing the books’ when we are all driving electric cars?

Enterprise Management Incentives – From 6 April 2024, the government will extend the deadline for notifying an EMI option from 92 days following grant to the 6 July following the end of the tax year. This is welcome and something we called for in a Budget representation (see para 2.24). (See Enterprise Management Incentives: Changes to the process to grant options)

Help to Save - The CIOT's Low Incomes Tax Reform Group (LITRG) welcomes the Budget announcement regarding the Help to Save savings scheme, extending it for 18 months.

Pension saving - LITRG says the Higher pension savings allowance is good news for retirees returning to work – but warns people to watch the small print!

Assignments of income tax repayments - LITRG has welcomed the confirmation in the Budget that it will render void assignments of income tax repayments with effect from today (15 March 2023).