With a focus on the cost-of-living crisis and encouraging people back into work, the Spring Budget 2023 introduced a host of new initiatives, from free childcare to frozen fuel duty. Here’s what you need to know
Free childcare for under twos
The biggest news for working parents is that the UK Government has committed to offering 30 hours of free childcare each week for children under the age of two. Childcare is often one of the largest expenses in a family’s budget and some parents find that the cost is so high that going back to work doesn’t make financial sense. Having access to free childcare will be a relief to many, but there’s a little while to wait until this policy comes into force. Working parents of two-year-olds will have access to 15 free hours from April 2024, extending to cover children over nine months from September 2024. The full 30 hours will be available from September 2025.
Extension of the energy price cap
Rising energy prices have affected many UK households this winter with many people having to make difficult decisions between heat and food. These increased costs have also disproportionally impacted those who were already struggling with their bills as well as households with prepayment meters. While we can take steps to conserve heat and reduce our energy usage, these lifestyle changes are unlikely to be able to get our bills back down to where they were this time last year. To help households in need, the Spring Budget extended the energy price cap for another three months, which should save the average family around £160. Customers with prepayment meters will also no longer be penalised with their bills being brought in line with those who pay by Direct Debit.
Fuel duty is frozen (and so is the price of a pint!)
Fuel costs have fluctuated wildly in the past year. We’ve seen prices at the pump reaching record highs, a fuel shortage that caused queues and widespread panic, and, more recently, a gradual reduction in the price per litre. The Government has pledged to help keep fuel prices low in the year ahead by freezing fuel duty at its current level and maintaining the 5p reduction. There’s good news for those of us who enjoy a pint at the pub too; from 1st August 2023, duty on draught products sold in pubs and bars will be 11p lower than the duty charged on beer bought in the supermarket.
Tax increases and support for small businesses
If you run your own business, you might not be so pleased to see that corporation tax for firms who make a profit of over £250K has increased from 19% to 25%. However, to offset this rise, small business owners will benefit from an increase in their investment allowance to £1m. This means that, depending on the size of your business, you may be able to deduct a significant amount of your investment from your taxable profit. Companies will also now be able to deduct funds that they’ve invested in new machinery and technology. These initiatives were introduced alongside 12 new investment zones. These zones will be located across the UK and will receive tax breaks, benefits, and £80m of funding over the next five years.
The Pothole Fund
Have you ever blown a tyre or ended up with coffee all over your car because you’ve accidentally driven over a pothole? The condition of our roads might not sound serious when compared with the cost-of-living crisis, but potholes can be a safety hazard as well as an inconvenience. The Spring Budget 2023 included £8.8bn of funding for sustainable transport over the next five years as well as £200m dedicated to fixing potholes.
Occupational health
COVID-19 and the cost-of-living crisis have made the last few years extremely tough for everyone. If you’ve found these pressures have impacted your mental health, you’re certainly not alone, and the Spring Budget is recognising this by freeing up funding to make more mental health resources available for workers. Office workers and those in manual jobs who suffer from back pain will also be glad to hear that some of the £400m pledged will also go towards workplace musculoskeletal resources.
Changes to benefits
Hoping to get as many people back into work as possible, the Government have introduced benefit reforms as part of the Spring Budget. People who receive disability benefits will now be able to seek work without losing their financial support and their benefits entitlement will now be judged separately to their ability to work. However, those receiving universal credit may find that sanctions are applied more rigorously if they fail to meet their job search requirements or choose not to take up a reasonable job offer.
Pension perks
People approaching pension age are also being encouraged to continue working for longer with the annual tax-free pensions allowance increasing from £40K to £60K. The lifetime allowance has also been abolished.
Are you concerned about how the Spring Budget 2023 might affect your finances? Our friendly debt advisors are here to help. Give us a call on 0161 8260 585 or send a message here