The government’s Spring Budget was delivered on 15 March by Chancellor Jeremy Hunt. It focused on encouraging people who have left their jobs to return, as well as boosting business investment.
The government’s Spring Budget was delivered on 15 March by Chancellor Jeremy Hunt, with a number of policies impacting businesses at all levels. We’ve pulled out some of the key points that SMEs should take note of.
Energy
The energy bill price cap increase will still be going ahead in April. Businesses will get a discount on wholesale prices of gas and electricity, rather than a fixed price.
There has also been a commitment to invest £20bn over the next two decades on low-carbon energy projects, with a focus on carbon capture and storage.
Childcare costs
The chancellor announced a series of childcare reforms:
This includes providing 30 hours of free childcare a week to parents of children aged between nine months and two years old. Currently, only parents with children aged three and four can access free childcare.
Hunt says support will be phased in until every eligible working parent of under five-year-olds gets this support by September 2025.
5p fuel duty
The temporary 5p fuel duty cut has been extended to April 2024. The chancellor also confirmed a freeze on fuel duty for the next 12 months to help save drivers money on tax.
Hospitality businesses will also pay less tax on a pint with the freezing of fuel duty on average-strength draft beer. From 1 August, the duty on draught beer will be up to 11p lower than the relief for supermarkets.
Corporation Tax
Rishi Sunak announced in the March 2021 Budget that Corporation tax will be increasing from 19% to 25% on 1 April and this remains the case.
Jeremy Hunt has noted that only 10% of companies will pay the full 25% rate.
Investment Zones
The government is introducing a new investment zone scheme to encourage investment for businesses in England. Each zone will get £80m of funding to use for skills, infrastructure, tax reliefs, and business rates retention.
Eight locations will be eligible:
West Midlands
Greater Manchester
North East
South Yorkshire
West Yorkshire
East Midlands
Teeside
Liverpool
There will also be at least one investment zone each in Scotland, Wales, and Northern Ireland.
New investment allowance for businesses
Hunt revealed a new investment allowance that will reduce the tax liabilities for businesses investing in new IT equipment, plant, or machinery. The allowance means businesses can deduct these costs from their profits immediately.
There will also be a new tax credit for small and medium-sized businesses that spend 40% of their expenditure on R&D.
Hunt also said tax reliefs for film, TV, and video gaming will be extended.
£900m was also provided for a new super computer facility, to help the UK’s AI industry
Pensions
It was announced that the pensions Lifetime Allowance will be abolished. This affects the amount you can save into your pension pots before you start paying tax.
The annual pensions tax-free allowance will increase from £40,000 to £60,000.
New Employees
There will be an expansion of the government’s ‘Skills Bootcamps’ for the over 50s, offering more free training in sector-based skills. There is now funding for more places for people of all ages looking to upskill or find a new job opportunity, with £63m for programmes to encourage retirees over 50 back to work, “returnerships”.
There will be an additional 8,000 Skills Bootcamps places in 2024-25 in England, and 40,000 new Sector-Based Work Academy Programme placements across 2023-24 and 2024-25 in England and Scotland. Employers can use Skills Bootcamps to recruit staff or help inform course content to address skills shortages in their sector.
