Chancellor Jeremy Hunt, has introduced the UK’s 2023 budget. The budget addresses key areas such as corporate taxation, energy prices, research and development, and employment schemes.
With these measures, the government says it aims to encourage people who have left the workforce to re-enter it.
Pensions tax reforms
Hunt announced the scrapping of the £1 million cap on the amount people can save for their pensions before being taxed extra. Furthermore, the annual tax-free allowance on pensions has been increased from £40,000 to £60,000.
He further announced the government would launch “returnerships”, apprenticeships designed to help people over 50 find a path back to work.
Corporate taxes still to increase
Despite pressure to halt plans to increase corporate taxes, Hunt is moving forward, announcing that corporate tax will be increased from 19% to 25% in April for businesses with more than £250,000 in profits.
A new £9 billion policy will allow firms to write off all investments against their tax bills. Moreover, research-intensive businesses will receive an “enhanced credit” worth £27 for every £100 they invest.
Chancellor Hunt has introduced a new voluntary employment scheme for disabled people, offering universal support and up to £4,000 for up to 50,000 individuals. Additionally, Hunt said the work capability assessment would be abolished.
Furthermore, a £400 million scheme will provide mental and physical health support to workers with health problems. The goal is to support people who would otherwise be forced to leave work because of chronic conditions.
Investment in childcare
The government has committed to increasing funding for free nursery places through 2023 and 2024. Hunt announced that there would be 30 hours of free childcare for every child over the age of 9 months with working parents by September 2025, introduced in phases:
- April 2024: 15 hours of free childcare for working parents of two-year-olds
- September 2024: 15 hours of free childcare for working parents of children aged nine months to three years
Energy Price Guarantee
The Energy Price Guarantee will remain at £2,500 until July. The budget also includes a £20 billion investment in carbon capture and storage.
Hunt said OBR’s projections no longer predict a recession, instead showing a contraction of around 0.2% followed by growth over four years.