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Spring Budget 2023: What You Need to Know

This week, Chancellor Jeremy Hunt set out his spending plans in the 2023 Spring Budget.


There's always a lot to digest whenever a new budget comes out so to make it easier, the BRC have pulled out a number of points which have been announced that we think are the most important and will affect retailers. These cover four E's:


  1. Employment: Boosting labour supply, including by encouraging the inactive into work.

  2. Education: Providing everyone with the skills and support they need.

  3. Enterprise: Providing the right conditions for businesses to succeed.

  4. Everywhere: Ensuring the benefits of economic growth are felt across the UK.



A number of measures have been announced that will impact our industry. These measures include:


BUSINESS TAXATION

  • Capital Allowances Full Expensing: Companies able to deduct investment in new machinery and technology to lower their taxable profits. Though for companies enjoying less than £50,000 of profits, they are unlikely to exceed the Annual Investment Allowance of £1m anyway so this is no change.

  • Corporation Tax Changes: Companies with profits between £50,000 and £250,000 to pay between 19% and 25% corporation tax (as first announced by Rishi Sunak in his 2021 Spring Budget as Chancellor). For small businesses making profits of less than £50,000 there will be no change.

  • Business Rates Changes: The government intends to expand the local retention of business rates to more areas. And is having consultations on measures to combat business rates avoidance and evasion.

  • 2023-24 Plastic Packaging Tax: The government will uprate the Plastic Packaging Tax rate in line with CPI, from 1 April 2023.

  • VAT relief for energy saving materials: The government has published a call for evidence on options to reform VAT relief for the installation of energy saving materials in the UK.

EMPLOYMENT AND EDUCATION

  • Returnerships: The government will introduce Returnerships, a new initiative promoting existing skills interventions to the over-50s, focussing on flexibility and previous experience to reduce training length.

  • There was no reform of the Apprenticeship Levy.

  • Reforming pension tax thresholds: The government will increase the Annual Allowance from £40,000 to £60,000 from 6 April 2023. Individuals will continue to be able to carry forward unused Annual Allowances from the 3 previous tax years.

  • 30 hours free childcare for working parents and support for childcare providers: The government will provide £4.1 billion by 2027-28 to deliver 30 hours a week of free childcare for eligible working parents of children aged 9 months up to 3 years in England, where eligibility will match the existing 3 – 4 year old 30 hours offer.

GROWTH AND INVESTMENT

  • Regulators and growth: As part of the Regulation of Technologies Review, the government has asked Sir Patrick Vallance to report on how regulators can better promote growth and innovation.

  • Investment Zones: The government is launching the refocused Investment Zones programme to deliver 12 high-potential knowledge-intensive growth clusters across the UK, including four across Scotland, Wales and Northern Ireland.

CHANGES TO DUTIES

  • Fuel duty rates: The government has frozen the rates of fuel duty at the current levels for an additional 12 months.


There was no mention of extending the Energy Bill Relief Scheme for SMEs (small-medium enterprises). It is still to be replaced by the Energy Bill Discount Scheme running from 1 April 2023 (when the current Energy Bill Relief Scheme ends) until 31 March 2024. We did a full overview of this new scheme when it was first announced at the beginning of the year.


Responding to the Chancellor’s Budget announcement yesterday, Helen Dickinson OBE, Chief Executive of the British Retail Consortium, said:

“In the face of volatile demand caused by high inflation and low consumer confidence, measures to support households with the cost of living, such as the ongoing energy bill support and changes to childcare costs, are welcomed. However, many businesses are weighed down by a myriad of higher costs right through the supply chain...
“The Chancellor understands the need to train people to re-enter the workforce, yet he missed a key opportunity to fix the issues with the Apprenticeship Levy system that would support this very goal. Over the last three years, businesses have lost £3.5bn in unused Levy funds.
"To break this cycle of wasted investment, it is vital that Government allows businesses to use their hard-earned Levy funds for a wider array of skills courses. Without spending a penny, the Chancellor would increase investment in our workforce, helping businesses to prepare the UK economy for the skills it needs."

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