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Spring Budget 2023 Highlights: what does it mean for small businesses?
Chancellor Jeremy Hunt delivered his Spring Budget announcement on the government’s spending plans on 15 March 2023. The Chancellor focuses on four key priorities – Employment, Education, Enterprise and Everywhere. Here is a summary of the key highlights and the implications for HR and businesses.
The budget outlined plans to get people who are out of work back into employment. The government intends to work with employers to remove barriers to employment by “tackling labour shortages that stop businesses recruiting and breaking down barriers that stop people working”. Specifically for early retirees, people with disabilities, those on long-term sickness and parents or guardians who are out of work due to childcare responsibilities.
Incentives to entice early retirees back into work include raising the tax-free allowance for pensions. This also includes abolishing the Lifetime Pensions Allowance. For people with disability, the government will allocate up to £4,000 per person to help each person find a suitable job and put in place the support they will need. There are also plans to provide hubs that provide healthcare and support for those on long-term sickness to help them get back to work. The Spring Budget announcement unveils plans to extend free weekly childcare to children below the age of three. And eventually to nine months olds to facilitate those with childcare responsibilities to return to work.
Skills boot camps and apprenticeship for over 50s
An expansion of the government’s ‘Skills Bootcamps’ will be expanded for the over 50s. Therefore, offering more free training in sector-based skills. The scheme currently offers up to 16 weeks of free training with a guaranteed interview with an employer at the end of the course.
The Spring Budget sees funding for more places for people of all ages looking to upskill or find a new job opportunity. Thus, there will be an additional 8,000 Skills Bootcamps places in 2024-25 in England, and 40,000 new Sector-Based Work Academy Programme placements across 2023-24 and 2024-25 in England and Scotland.
Employers can use Skills Bootcamps to recruit staff or help inform course content to address skills shortages in their sector.
New investments zone scheme
A new investment zone scheme unveiled in the Budget hopes to encourage investment for businesses in England. Each zone will get £80m of funding each to use for skills, infrastructure, tax reliefs, and business rates retention. There will be eight zones across England, covering:
- West Midlands
- Greater Manchester
- North East, South Yorkshire
- West Yorkshire
- East Midlands
- Teesside; and
There will also be at least one investment zone each in Scotland, Wales and Northern Ireland.
New investment allowance for businesses
The announcement revealed a new investment allowance that will reduce the tax liabilities of businesses investing in new IT equipment, plant or machinery. From April 2023 until the end of March 2026, companies can claim 100% capital allowances on qualifying plant and machinery investments.
There will also be a new tax credit for small and medium-sized businesses that spend 40% of their expenditure on Research and Development.
Corporation tax increasing
Although it is not strictly a budget announcement, it is worth reminding that corporation tax is increasing from 19% to 25% on 1 April. This was originally planned by Ex-Chancellor Rishi Sunak. The increase will affect 10% of companies that will be required to pay 25%.
Tax on pensions is changing
Pensions were a key update in the Budget. The chancellor has announced that the pensions Lifetime Allowance charge will be removed from April this year before the Allowance comes to an end in April 2024. This affects the amount you can save in your pension pots before you start paying tax on it. The annual pension tax-free allowance will increase from £40,000 to £60,000.
View the full Spring Budget 2023.
Author: Mary Asante | Chief Executive