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What was announced in the March 2023 budget?

Once a year the government announces a new budget to indicate how government money will be spent over the next 12 months and beyond. Jeremy Hunt has today (15 March 2023) announced many changes that may affect your home, family or business moving forwards.

There was a lot covered in today’s budget, so we’ve put all the key facts together to make things a little easier for you.

We will explain what has been announced, how this might affect you and what to expect from government spending in 2023.

In this section (What was announced in the March 2023 budget?):

There has been speculation for days about what would be announced in today’s Spring 2023 budget. Most people expected a focus on UK economic growth following the effects of the Covid-19 pandemic, by helping support those in the workforce or those seeking to find work. There has been slow recovery in Great Britain’s public sector (heath services particularly) and the government is keen to resolve this issue long term.

Many news outlets including the BBC have referred to today’s announcement as the ‘back-to-work budget’ because of this.

Main points from the 2023 Spring budget announcement:

  • 15 hours FREE childcare support for parents working 16 hours a week (or more) has been announced for parents of children aged 9 months up to 5 years old beginning in 2024
  • The government will pay childcare costs for parents on Universal Credit who are going back to work or increasing their hours upfront (not in arrears). The amount you can claim per child will also increase by about 50% (£951 for one child, £1,630 for two children)
  • As was widely predicted, government support for energy bills via the Energy Price Guarantee has been extended to June 2023 (welcome news for anyone struggling with increased energy costs of gas and electricity)
  • The Office for Budget Responsibility expects high levels of inflation to fall to 2.9% by the end of 2023, meaning ideally lower costs for things such as weekly shopping and household bills
  • Charges for people using pre-payment meters for their energy supply are to be brought in line with direct debit charges (meaning those paying via prepayment no longer need to pay extra because of this)
  • Fuel duty has been frozen and the current 5p reduction to this will stay in place for another year – the planned 11p rise has been cancelled to help drivers save up to £100 a year
  • Alcohol duty (tax relief) on pints bought in a pub is set to be 11p lower than alcohol bought in supermarkets as part of a new ‘Brexit pubs guarantee’
  • The lifetime allowance for pensions has been scrapped to encourage people not to take early retirement, meaning you can build more money in your pension without being charged extra pension tax
  • The Pensions Annual Allowance (the maximum amount paid into a pension per year) has also increased from £40,000 to £60,000
  • People on disability benefits will not have to complete a work capability assessment anymore, to try and encourage disabled people to look for work without worrying they will lose the benefits they receive
  • A new over 50s apprenticeship program (‘returnerships’) will be introduced to help encourage older workers back into the workforce
  • Additional investment in public services (includes £5billion for defence and national security)

The government has also announced several things that will affect business owners moving forwards:

  • The corporation tax charged on profits more than £250,000 a year will rise from 19% to 25% from the beginning of April.
  • Businesses will be able to offset any investments in the UK against their profits for lower tax bills
  • Small and medium sized businesses will be able to claim credit worth £27 for every £100 they spend (if more than 40% of their business expenses are for research and development)

The main take away for most families will be the increased childcare support and continued support with energy bills. The cost of living in the UK has risen dramatically over the last year, so news of any additional support will be welcome news for many struggling families.

The key facts about new childcare support are:

All adults in the household must be working at least 16 hours per week

  • You can qualify when your child is aged 9 months onwards
  • You will receive 15 FREE hours of childcare per week, rising to 30 from September 2025
  • School and local authorities are to be paid more to fund ‘wraparound’ childcare, meaning parents with long working hours will be able to drop their children 8AM-6PM if needed

The roll out of this will be staggered, so you may not be able to benefit straight away:

  • From April 2024, children aged 2 and up will qualify for 15 hours free childcare
  • From September 2024, children aged 9 months and up will qualify for 15 free hours of childcare
  • From September 2025, every working parent of a child under 5 will be able to access 30 free hours of childcare a week

While this is good news overall, families won’t feel the benefit of increased childcare support until 2024. For anyone struggling with the cost of living currently, there are several forms of support you may be eligible for including:

Energy bills update

As was predicted following increasing public pressure, Jeremy Hunt announced that the government’s current Energy Price Guarantee (EPG) of £2,500 for an average household’s energy will now run until the end of June 2023.

This was set to rise to £3,000 from the 1st April as stated in last year’s Autumn mini budget. This has been postponed for the time being, Other important energy news:

  • The energy rebate scheme (£400 payment) is still set to end as of April
  • Anyone using a pre-payment meter to pay for their energy will no longer have to pay more than those paying via direct debit

Generally, the budget is meant to be an annual event, meaning there shouldn’t be another budget until 2024. However, there can be certain situations that lead to announcements about government spending before this.

For example, last year there was an Autumn ‘mini budget’, which was very similar to a standard budget announcement.

You can keep up to date about any financial news and updates in our News and Blogs section.

Resources

Gov.uk – Chancellor unveils a budget for growth

Gov.uk – Spring budget 2023

Office for National Statistics – Cost of living latest insights

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