The government has today revealed the details of the Spring Budget 2023, outlining the fiscal plans, policies and changes to various tax aspects for individuals and corporations.
Chancellor Jeremy Hunt explained that the UK is expected to avoid a technical recession this year, according to the Office for Budget Responsibility. Moreover, inflation is set to fall to 2.9% by the end of the year, from the current rate of 10.1%.
This budget aims to achieve growth by "removing obstacles that stop businesses investing; by tackling labour shortages that stop them recruiting; by breaking down barriers that stop people working; and by harnessing British ingenuity to make us a science and technology superpower."
Here are the considerations from today's Spring Budget announced by Chancellor Jeremy Hunt:
Corporation tax for businesses is set to increase from 19% to 25%, as planned. Firms that make a profit of more than £250,000 will pay 25% tax on their profits from April 2023.
R&D Tax Credits
Small or medium-sized businesses that spend 40% or more of their total expenditure on Research and Development will be able to claim a credit worth £27 for every £100.
A total of 12 new Investment Zones were announced, with at least one in each of Wales, Northern Ireland and Scotland. There will also be more across the West Midlands, Greater Manchester, the North East, South Yorkshire, West Yorkshire, East Midlands, Teesside and Liverpool.
Annual Investment Allowance
The Annual Investment Allowance has been increased to £1m, which allows businesses to deduct the full value of their investment from that year's taxable profits.
There will be a new policy of 'full expensing' for next three years, with intention to make it permanent. Full expenses on IT equipment, Plant and machinery can be deducted in full for next 3 years. This replaces the 'super deduction' previously in place.
The annual tax-free allowance has been increased by 50% from £40,000 to £60,000 and the £1.07m lifetime allowance abolished.
Funding for pioneering research
The Chancellor also announced that that a prize worth £1m will be awarded every year, for the next 10 years, "to the person or team that does the most ground-breaking AI research".
Fuel duty will be frozen and a 5p reduction will be maintained for a further year.
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