Yesterday Jeremy Hunt announced his first Budget since becoming Chancellor. The measures that are being proposed very much fit the continued theme to provide stability to markets by driving down inflation, government borrowing and interest rates.
We thought we would put together the key highlights in simple terms;
– The Lifetime Allowance (LTA) for Pensions has been abolished from the tax year starting 2023/24. This is the maximum value of benefits that can be taken from a registered pension scheme without being subject to the Lifetime Allowance Charge – the LTA currently stands at £1,073,100.
– The annual allowance for Pension contributions will be increased by 50% to a maximum of £60,000 from 2023/24 (previously £40,000).
– Money Purchase Annual Allowance will rise from £4,000 to £10,000 from 2023/24. This is the amount you can pay into a Pension once you have started to derive an income from Defined Contribution Pension plans.
– Up to 30 hours of free childcare will be available for working parents (minimum 16 hours a week) of children from the age of 9 months by September 2025. This will be introduced with staggered increments initially from April 2024 with working parents of 2 year olds being able to access 15 hours of free childcare.
– Companies investing in new plant and machinery in the 3 years from 1st April 2023 can claim a first year allowance of up to 100% of expenditure.
– SMEs that spend 40% or more of their total expenditure on Research & Development can claim a tax credit worth £27 for every £100 they spend from April 2023.
– The Energy Price Guarantee that is currently in place at £2,500 will be maintained at that level until the end of June 2023.
Inflation remains the most pressing issue to markets at this stage, although there are signs across the world it seems to have peaked. The Office for Budget Responsibility forecasts that the CPI inflation rate will fall from the current 10.1% (January 2023) to just 2.9% by the end of the 2023 year.
As always, should you require any help understanding the above or feel you would benefit from coming to see us to discuss your finances, please do not hesitate to contact us on 01977 600020 or email your financial adviser.