Spring Budget 2023: Key Takeaways for Small Businesses and the Self-Employed

Chancellor Jeremy Hunt unveiled the government’s Spring Budget, outlining various plans affecting small businesses, from tax changes to energy bill support. This article summarises the crucial points for SMEs.

Energy Price Cap and Discount Scheme

Despite economic challenges, the energy bill price cap increase will proceed in April. Businesses will receive a discount on wholesale gas and electricity prices under the Energy Bills Discount Scheme, which will run until 31 March 2024. Households will benefit from an extended Energy Price Guarantee, capping typical energy bills at £2,500 per month for April, May, and June.

Corporation Tax Increase

Though not a new Budget announcement, corporation tax will increase from 19% to 25% on 1 April, as previously announced by Rishi Sunak.

Investment Zone Scheme and New Investment Allowance

The government has introduced an £80m investment zone scheme to fund skills, infrastructure, tax reliefs, and business rates retention in eight English regions, as well as at least one investment zone each in Scotland, Wales, and Northern Ireland.

A new investment allowance will reduce tax liabilities for businesses investing in new IT equipment, plant, or machinery.

R&D Tax Credit and Extensions

Small and medium-sized businesses spending 40% of their expenditure on R&D will receive a new tax credit. Tax reliefs for film, TV, and video gaming will be extended.

Tax on Draught Beer Frozen

The duty on draught beer will be frozen, making it up to 11p cheaper compared to supermarket prices.

5p Fuel Duty Cut Extended

The temporary 5p fuel duty cut, initially set to end on 31 March, has been extended to April 2024. Fuel duty will also be frozen for the next 12 months.

Pension Changes

The Lifetime Allowance for pensions will be abolished, while the annual pensions tax-free allowance will increase from £40,000 to £60,000.

Childcare Support Expansion

The government has announced a series of childcare reforms, including:

• Extending 30 hours of free childcare per week to parents with children aged between nine months and two years old
• Phasing in support for all eligible working parents of under-five-year-olds by September 2025
• Increasing the hourly rate paid to nursery providers from September 2023
• Raising the Universal Credit cap on childcare support to £951 for one child and £1,630 for two or more children per month
• Changing payment methods so parents receive upfront payments rather than refunds

New childminders will receive incentive payments of £600, or £1,200 if joining through an agency.

Expanded Training for Over 50s

The government will expand its ‘Skills Bootcamps’ for over 50s, providing more free training in sector-based skills. An additional 8,000 Skills Bootcamps places in 2024-25 and 40,000 new Sector-Based Work Academy Programme placements across 2023-24 and 2024-25 will be made available in England and Scotland.