As we get closer to the Spring Budget announcement on 15th March, the predictions of what it could entail are rolling in. Growth seems to be the theme of the announcement yet again, as the nation continues to recover from the pandemic and the recession that it has resulted in. The Chancellor of the Exchequer, Jeremy Hunt, recently laid out his four pillars for growth: Enterprise, Education, Employment and Everywhere.
We are now mere weeks away from the beginning of the 2023/24 tax year, which will mark the introduction of a number of policies announced by Hunt in his Autumn Statement back in November. There are a few issues currently dominating public interest, mainly the ongoing cost-of-living crisis and fiscal instability the nation faces, as well as the unwavering industrial action from public sector workers.
The spring budget gives Hunt a chance to share an insight into the state of the nation’s economy, as well as announce any planned changes to spending or taxes. As we wait in anticipation, here are some of the main predictions circling about what the Chancellor will announce for the Spring Budget.
As the nation prepares for a rise in corporation tax, we can’t ignore the fact that the UK may struggle to maintain its internationally competitive tax environment. The Chancellor may announce future tax cuts that will take place once the economy becomes more stable. He’s likely to prioritise tax incentives for investments which would support his growth plan.
Alongside this, some are expecting a corporate ‘re-domiciliation’ policy to be announced. This is where companies can change their place of incorporation to the UK while maintaining their legal identity as a corporate body. This policy would make it easier for companies to move their legal identity to the UK entirely, therefore bringing more business to the nation.
For some, one of the more significant announcements from the Autumn Statement was the lowering of the threshold for the additional rate (45p) of income tax. At the same time, it was explained that the basic and higher rates of income tax would remain the same and be kept under a freeze until 2028. It had previously been confirmed, however, that the basic rate was expected to decrease to 19% in 2024. The freeze announced in November means that this is a long time from coming to fruition, and many are expecting this to be further delayed in the Spring Budget.
Currently, the UK state pension age is 66 and is expected to be 67 by 2026 and 2028. However, there are differing opinions on whether the government will bring this forward and maybe even raise it to 68 as a quick fix for additional income to government funds. There are extremely varied expectations of when the state pension age could be increased, with some
thinking in the next couple of years, whereas others think it will be closer to 15-20 years.
Wholesale energy prices are beginning to fall, which will hopefully be good news for UK individuals, families and businesses alike. This means that the energy support packages currently in place for businesses will cost less than expected. As a result of the fall in prices, the support packages may not be extended beyond April, meaning that Hunt could use the Spring Budget to announce where the money will be redirected.
Despite the sign that energy prices could be returning to normal, Hunt is still being encouraged to extend the Energy Price Guarantee (EPG), given the unprecedented nature of the cost-of-living crisis. This will show that the government aims to protect those struggling to afford their bills.
Property tax enforcement
HMRC have ongoing issues with residential property owners who fail to file the appropriate tax returns or intentionally use loopholes to remain unidentifiable. Tax enquiries often see an £18:£1 return on investment, leading some to speculate that Hunt may announce an increased investment in the enforcement of property taxes.
Public sector pay
In the Autumn Statement, Hunt announced significant increases to National Minimum Wage and the National Living Wage. After months of constant industrial action from public sector workers, a pay rise could be discussed for them in the Spring Budget. It would take a 5.5% pay rise to close the public/private pay gap as it currently stands.
The Spring Budget will take place on 15th March, and our Budget summary will be shared shortly after. If you would like to receive this straight to your inbox, then you can sign up here
You can find more of our latest blogs here!