Spring Budget 2023

On Wednesday 15th March, Jeremy Hunt, The Chancellor of the Exchequer announced the UK Spring Budget. The Chancellor has said that the UK faces “A hard road”[1] on the way back to pre-pandemic and economic downturn prosperity, but that the economy “is on the right track”[2]. 

This ambiguity can be a worrying thing to hear. However, Epos Now is committed to supporting our customers and ensuring they have the tools and know-how to survive and thrive. 

We know that our customers have been feeling the effects of this uncertainty for a while now. This blog will go through what the budget is and what UK businesses can expect in the months ahead. 

What you’ll find in this blog

• What is the Spring Budget?
• When was the Spring Budget for 2023 released? 
• What is included in the Spring Budget? How will it affect my business?

What is the Spring Budget? 

The Spring Budget, also known as the Spring Statement, is an annual report presented to Parliament by the Chancellor of the Exchequer. It serves as a general update on the economic health of the country, forecasts for the future, and a way to share progress on the promises made in the Autumn Statement.

The budget is also used to announce new programmes and processes the Government intends to introduce over the coming months. While no votes will be conducted, many new policies and programmes will be put to Parliament for the first time. 

It should go without saying that the budget is one of the more important events in the political calendar. The budget has a huge effect on the general economy and government policy. As a business owner, you will want to know if the policies shared by the chancellor will affect you and your livelihood. 

When was the Spring Budget released? 

The Chancellor addressed Parliament on Wednesday the 15th of March 2023. It’s customary for the budget to be delivered after Prime Minister’s Questions - this year it was set around 12:30 pm GMT. 

In addition to the budget, the Office for Budget Responsibility (OBR), the Government’s spending watchdog, also delivers an economic and fiscal outlook report. 

This blog breaks down some of the key areas of the statement that may affect UK businesses. You can read the full statement on the UK Government website here. 

What is included in the Spring Budget? 

The Spring Budget covers the entire financial side of the country. This means that it is quite far-reaching in its scope. 

Below, we’ve compiled a list of the policies that we believe will have the biggest impact on our customers. No matter what has been announced, we are committed to providing the best possible service to our customers and giving them the tools they need to succeed.

Energy bill support 

The rising cost of energy from 2022 to 2023 has been a constant source of contention in the UK for businesses and domestic households alike. 

In the Spring Budget, it’s been announced that the energy price guarantee will be extended for a further three months from April to June at its current level. However, this is focussed on household bills. 

While we support the extension of the scheme for a further three months, this still offers a lot of uncertainty for businesses and households post-June.

How this could impact your business:

• There’s been no energy bill relief set out for businesses. 
• You may need to look at other ways you can save money in your business.

Fuel duty costs

The 5p fuel duty cut introduced by Prime Minister Rishi Sunak was set to expire this month in March 2023. 

The Chancellor has confirmed that now is not the right time to update fuel duty with inflation, or increase the duty, following the example of every Chancellor since 2011 and cancelling the RPI fuel duty rise.

So, for the next 12 months, fuel duty is to be frozen and the 5p fuel duty cut will remain in place.

How this could impact your business:

• Businesses shouldn’t see increased costs from suppliers to cover rising fuel bills.

Corporation tax rise 

Mr Hunt has confirmed the proposed rise in corporation tax. This rise, scheduled to take place in April, goes against the advice offered by the business community which has said the rise would hamper growth. 

Under the proposed plans, corporations will see the tax rate rise by up to 6% (from 19 per cent to 25 per cent). This increase would net an extra £18bn per year for the Treasury. 

How this could impact your business:

• Businesses with profits less than £50,000 will see no rise to their tax bill. 
• Businesses making profits between £50,000 - £250,000 will be offered marginal support. 
• Businesses with profits of more than £250,000 will see the full rise to their tax bill, with no relief.

Super-deduction axed and replaced

Business investment incentives are set to be stripped away. The £25bn super-deduction corporation tax break, that allowed businesses to cut their tax bill by 25p for every £1 they invested, will end on the 31st of March 2023. 

However, Jeremy Hunt has announced a replacement for the super-deduction tax break; called “full expensing”, which will be available for the next three years. This will allow 100 per cent of qualifying capital expenditure in the UK to be written off against taxable profits in the year it is incurred.

This “full expensing” will increase business investment by 3 per cent for every year it is in place.

How this could impact your business:

• Your tax bill for your business will increase after 1st April 2023 if you used the corporation tax super-deduction.

Frozen tax on draught beer in pubs

This news certainly impacts several of our customers!

Jeremy Hunt had announced in the Spring Budget that the tax on draught beer in pubs will remain frozen from 1 August 2023.

Mr Hunt has told MPs that:
“From August 1 the duty on draught products in pubs will be up to 11p lower than the duty in supermarkets, a differential we will maintain as part of a new Brexit pubs guarantee. British ale may be warm, but the duty on a pint is frozen.”[3]

How this could impact your business:

• This will only impact UK pubs, and comes into effect from 1st August 2023.

“Returnerships”

Looking at the problem of employment, particularly for those who are pre-retirement (those over 50 years old), Jeremy Hunt has announced a new kind of accelerated apprenticeship called “returnerships”. 

How this could impact your business:

• We will see more people being upskilled and reaching their full potential in the labour market. This could mean more people upskilling for the jobs you need to fill in your business.

OBR forecast summary

As part of the Spring Budget, the economic forecast has been laid out for the next five years. Jeremy Hunt has claimed that this forecast reveals that the UK will not enter a “technical recession” this year.

“...today, the OBR forecast we will not enter a recession at all this year, with a contraction of just 0.2%. And after this year, the UK economy will grow in every single year of the forecast period: by 1.8% in 2024; 2.5% in 2025; 2.1% in 2026; and 1.9% in 2027.” [4]

How does this impact your business?

• The economic forecast is optimistic, with small but continuous growth expected for the years ahead. This should mean spending will gradually increase too.

Closing thoughts

We understand that it is a difficult time for nearly all small and medium-sized businesses right now. 

After seeing the impact that the Spring Budget will have on businesses across the country, Epos Now will be looking to launch a helpful guide on coping in the current economic climate in 2023 for local businesses. Keep an eye on our social media and our newsletter for announcements.