The aims of the Chancellor in this year’s Spring Budget were to get people into work and keep them there, with key changes to childcare and pensions.
The Office for Budget Responsibility (OBR) stated that the UK will not enter a technical recession and inflation will more than halve and reduce to 2.9% by the end of the year. This Budget has been looked up as good news for workers and savers, with the ability to place more into one’s pension, without the trip hazards.
There is still a significant strain on households facing steep price rises, especially heating and power. So, Mr Hunt’s first action was to extend the Energy Price Guarantee (EPG) that caps household bills at £2,500 until the end of June. The typical annual bill was due to rise to £3,000 from April. The energy rebate scheme of six instalments of £67 per month has not been extended and will finish at the end of March.
Parents working at least 16 hours a week with children aged from nine months to five years, will get 15 hours free childcare to encourage caregivers to enter the workforce. This will be staggered from April 2024 to ensure enough places. Children up to two years old will get 15 hours free from April 2024, children from nine months up will benefit from September 2024, and from September 2025 every single working parent of a child under five will have access to 30 hours free childcare per week.
Turning to pensions and the Lifetime Allowance. The total amount that can be accumulated in pension savings before paying extra tax, has been abolished. Mr Hunt hopes it will stop 80% of NHS Doctors from receiving a tax charge. This is not only excellent news for Doctors, but for everyone else who has a pension worth in excess of the Lifetime Allowance – cynics might say that this boost could have been better targeted towards occupations like Doctors or even the NHS.
It was also announced that the pension Annual Allowance will rise by 50% from £40,000 to £60,000 per annum.
Alcohol duty sees tax relief of 11p per pint on draft drinks served in pubs from the 1st of August. There is an extension of the 5p cut in fuel duty, at a cost of £6bn and this will be frozen for the next 12 months.
The Chancellor announced a new apprenticeship called a Returnership, created for those over age 50, and the Government are looking to set up 12 new investment zones – think Canary Wharfs around the UK – which will attract additional boosts of £80m.
Businesses earning profits of over £250,000 will see Corporation Tax rise from 19% to 25% in April, although companies will now be able to offset 100% of UK investments against their profits to bring down tax bills. The Chancellor hopes that this will increase business investment by 3% every year.
However, the most important announcement for everyone based in Trafford Borough – Foresight’s home – and buried deep within the documents (clearly found by someone who likes the details at Foresight) is that an extra £200m per year, in addition to the £500m already allegedly allocated, has been earmarked to tackle the curse of potholes. Anyone that either lives in Trafford, or has travelled through Trafford, will understand just how important this announcement is!
As usual, the devil is in the detail, and it will only be over the coming weeks that we see the detail behind these Budget announcements. As they become available, we will keep you up to date and how they might affect your finances.