Spring Budget 2023
Jeremy Hunt, Chancellor of the Exchequer, delivered the Spring 2023 budget on 15 March. Dubbed a budget for growth, the Chancellor relayed confidence that the UK economy was on the right track and would avoid falling into a “technical recession”, defined as two consecutive quarters of contraction. There is likely to be one further Budget before the next general election and the Chancellor will be pinning his hopes that his Spring 2023 Budget provides scope for further vote-winning announcements.
For individuals, the main announcements concerned pensions with the abolition of the lifetime allowance (LTA) and increased annual allowances. The LTA will be abolished from the start of the 2023/24 tax year and will be removed entirely from pensions tax legislation. The annual allowance, which restricts the amount of tax-relieved pension saving an individual may make each year, has been increased from £40,000 to £60,000. For those considering retirement there is a new limit of £268,275 which applies to the tax free lump sum available to be withdrawn from an individual’s pension pot.
For savers, the 0% band starting rate for savers income will remain at £5,000 for tax year 2023/24 and will increase in line with the consumer prices index therafter.
As previously announced, Income tax thresholds are to be frozen at their current levels until April 2028. Foster carers and shared lives carers will see increases in the amount of qualifying care relief from income tax, with the annual fixed amount increasing from £10,000 to £18,140. The annual fixed amount will be increased in line with the consumer prices index from April 2024.
For Trusts and estates, the concession that small amounts of income (up to £500) arising to trusts and estates and beneficiaries of UK estates are not taxable will be formalised. In addition, the default basic rate and dividend ordinary rate of tax that applies to the first £1,000 slice of discretionary trust income has been removed.