…and here are the key points:
- Pension lifetime allowance abolished: The £1m cap on how much can be put into pension funds before taxes kick in was expected to be raised. Instead, it has been abolished, Mr Hunt hopes it will stop 80% of NHS doctors from receiving a tax charge.
- The pensions annual tax-free allowance will rise by 50% from £40,000 to £60,000.
- Energy price guarantee and the cost of living: Under the extension, average bills will be capped at £2,500 a month until June, rather than increasing to £3,000 next month as planned. Fuel duty and VAT on fuel were both frozen, meanwhile.
- Childcare: One big announcement was the plan to offer 30 free hours of childcare for working parents- working 16 hours a week – of children aged 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 of free childcare per week.
- Corporation tax: As corporation tax on profits over £250,000 is due to rise from 19% to 25% in April, businesses will be able to offset 100% of UK investments against their profits to bring down tax bills.
- An “enhanced credit” has been introduced for small and medium-sized businesses if they spend 40% or more of their total expenditure on research and development. They can claim credit worth £27 for every £100 spent.
- An extra £400m will increase mental health and musculoskeletal workplace support to stop people from being forced to leave work due to sickness.
- The government will abolish the work capability assessment for disabled people and separate benefit entitlement from an individual’s ability to work. The aim is to enable disabled people to seek work without fear of losing their benefits.
Tax relief of 11p has been announced on draft drinks served in pubs from 1 August 2023
Finally, Economic forecasts
The chancellor says this will be a budget for “long-term, sustainable, healthy growth”, and it will deliver “prosperity with a purpose”.
He says the OBR expects inflation, at 10.7% in Q4 of last year, to be 2.9% by the end of 2023.
Since the autumn statement, the OBR, along with many other forecasters, has become slightly less gloomy about the prospects for 2023. It is now expecting GDP to contract by 0.2%, instead of the 1.4% it predicted in November.
The chancellor says that will be followed by growth of 1.8% next year, 2.5% in 2025 and 2.1% in 2026. That compares with November forecasts of 1.3% for 2024, 2.6% for 2025 and 2.7% for the year after – so the OBR is expecting stronger growth in the next two years, but a slower recovery thereafter.