The Chancellor of the Exchequer Jeremy Hunt confirmed the details of his budget this week after a number of the policies were published in advance of his speech, which meant there were not that many surprises.
Jobs and work
The chancellor’s budget included a number of initiatives to get more people back into work as he believes we currently have too many people who are economically inactive. That might be because access to childcare prevents younger people from working or because older people have chosen to retire or feel they do not have the skills to work in today’s workplace.
As was extensively discussed before the budget speech was delivered, the government will be offering 30 hours per week of free childcare for all children over 9 months old; currently that is only available for 3 and 4 year olds. This will be phased in starting in April 2024 when 2 year olds will get 15 hours of free childcare with the younger children becoming eligible in September 2024. By September 2025, all eligible children aged between 9 months and 3 years will receive 30 hours.
In addition to this, the amount those on Universal Credit can claim for childcare will increase to £951 a month for one child and £1,630 a month for two.
For those older workers, the chancellor announced that £63m will be available to encourage those over 50s who have retired back into the workforce. Returnships – think internship but for those who already have skills and experience – and skills boot camps will boost skills and confidence to help them return to work.
He also announced that there will be a £20,000 increase in the amount that can be put tax-free into a pension each year, again designed to get people staying in the workforce and not retiring too early.
Taxation
There were no big changes to the amounts people as individuals will pay in tax but the chancellor did confirm that corporation tax will increase from 19% to 25% in April, although there will be tax breaks for investments in machinery and technology.
Taxpayers will now have a bit more time to make voluntary National Insurance payment to top up any gaps in their contributions as the deadline has been extended to 31st July 2023.
Energy costs
Under the Energy Price Guarantee, the government has limited energy bills for a typical household to £2,500 a year, plus a £400 winter discount. That was due to end in April but will now be extended into June. It is hoped that the fall in wholesale prices and reduced consumption in the summer will mean costs naturally falling back by then, so the subsidy won’t be required after that point.
Other announcements
It is traditional at budget time to see changes to alcohol and tobacco taxation and the chancellor made announcements about those too. Alcohol tax will rise in line with inflation from August although there will be reliefs for beers, wines and ciders sold in pubs to allow for better competition with supermarkets. Tobacco tax will rise by 2% above inflation and 6% above inflation for hand-rolling tobacco.
Fuel duty will be frozen so the 5p cut in duty will continue for another year.
This year’s spring budget didn’t have many headline announcements that will affect the average payroll but there are still some important changes coming up for workers so if you have any questions about the budget, don’t hesitate to get in touch.