The aim of today’s Spring Budget seems to have been to assist families with the ongoing cost of living crisis, assist businesses tackle the shortage of people in the labour market and grow the UK economy with substantial incentives for businesses investing in new qualifying assets. All admirable objectives.
From a tax perspective, it was much calmer than the statements/Budgets that took place in September and November last year. Probably the biggest surprise tax announcement today (although even it was partially leaked) was the abolishment of the Lifetime Allowance charge, which it is hoped will remove the barrier for some of those who have retired early or are thinking about retiring, to continue working. Undoubtedly this is some welcome simplification in an all too complex pension tax system. A word of caution though is that it was only November when the talk was of scrapping altogether higher and additional tax relief for pension contributions but for the moment there are certainly opportunities available for those in a position to pay extra pension contributions.
Incentives through the capital allowances system for investments by both companies and non-corporate business in qualifying plant and machinery will certainly help off-set the significant tax rises due to take place from next month.
Funding is being provided for the extension of tax free childcare schemes throughout the UK which it is hoped will encourage many parents to consider returning to work earlier than they might have and should provide help to family budgets to allow them to cope with the cost of living pressures faced by many families over the last year. The eligibility criteria will remain the same, so if one parent is for example earning more than £100,000 per annum they will not be eligible.
As always there is some proposed fine tuning of existing tax reliefs and some anti-avoidance measures but nothing too dramatic. This was certainly no give away Budget with tax cuts but this can’t seriously have been expected given the huge increases announced only a few months ago with public sector workers still being told there is no money in the pot for pay rises due to the poor state of the UK economy.
A fuller summary will be provided once we have worked through everything announced and evaluate how they will affect our clients.