The 2023 Spring Budget contained very few announcements regarding personal finance that will impact individuals.
First things first, the good news is that the Chancellor has decided to keep income tax rates the same, which means no increase in your personal income tax. National Insurance has not changed either.
However, don’t forget, it was announced previously that from April 2023, the rate at which people pay the additional rate of income tax, charged at 45%, would be lowered from £150k to £125,140, so if you are a high earner, this will now have kicked in.
There were also no changes regarding capital gains tax or inheritance tax.
Below you will find a summary of all the things that may however impact you:
Fuel duty
The government has announced that fuel duty will be frozen and a 5p reduction will stay in place for another year.
Energy Prices
The Energy Price Guarantee for households will remain unchanged for an additional three months until June 2023, capping the average household energy bill at £2,500 per year. The Energy Bills Relief Scheme, which aids businesses and other non-domestic energy consumers, will be replaced by the Energy Bills Discount Scheme, effective until March 31, 2024.
Pensions
Within the budget, there was emphasis placed on encouraging over 50s to re-enter the workforce, and the announcement to increase the Annual Allowance for pension contributions from £40,000 to £60,000 is intended to support this. However, for higher income individuals with ‘adjusted income’ over £260,000 the AA is normally tapered and, depending on the level of income, can be reduced to £10,000. The lifetime allowance (LTA), which is the overall limit on pension savings, will be abolished in a future Finance Bill, and the lifetime allowance charge on ‘LTA excess’ benefits will be removed from April 2023. Even though the LTA is being abolished, individuals will still face restrictions on the maximum amount of 25% of their pension pot that can be withdrawn without income tax charges upon retirement (the details of this are complex). Anyone who may be affected should review their pension arrangements.
Charitable donations
Starting April 2024, charitable tax reliefs will only be available to charities based in the UK, meaning donations to charities in the EU and EEA will no longer qualify for UK charitable tax reliefs. As of March 15, 2023, only charities that adhere to UK law will be able to register with HMRC. This change will affect those who seek higher rate relief on donations made to non-UK charities.
Crypto
Starting in April 2024, capital gains related to crypto assets will be distinguished and reported separately on the Self-Assessment Tax Return. This emphasizes the significance for those who possess crypto assets to maintain accurate records of all their transactions involving such assets and to ensure that they are reported correctly to HMRC.
Venture capital reliefs
The Government has reaffirmed its commitment to support start-ups and young companies by announcing the expansion of the Seed Enterprise Investment Scheme (SEIS) starting April 6, 2023. This includes doubling the annual amount for income tax and capital gains tax re-investment relief that individuals can claim to £200,000, increasing the qualifying company limits to enable companies to raise up to £250,000 and increasing the gross assets test to £350,000. Additionally, the age limit for a ‘new qualifying trade’ is extended from two to three years.
While Social Investment Tax Relief (SITR) will no longer accept new investments from April 6, 2023, the Community Investment Tax Relief Scheme (CITR) will see its funds’ limits for raising and deploying investments expand.
Summary
Overall, there not a great deal of announcements that will impact individuals, which was to be expected in order to maintain a period of stability.
