The Spring Budget

Published on: 16 March 2023


Yesterday (15 March) Chancellor Jeremy Hunt delivered the Spring Statement describing it as a “budget for growth”.  He was aided by the Office for Budget Responsibility (OBR) which forecasts the UK will no longer enter a recession this year, and also by the International Monetary Fund (IMF), which has stated the UK economy is now on the right path.  

Although Corporation Tax will rise to 25 percent, the Budget also confirmed major capital allowances, introducing full expensing and extending the 50 percent first-year allowance, which together are worth £27 billion over the next three years (further details below). Other measures focussed on getting people back into the workplace, through measures including more generous childcare allowances, new apprenticeships for the over 50s and abolishing the pension lifetime allowance. Below is a summary of the OBR’s headline forecasts and a summary of the Chancellor’s announcements which are especially relevant to industry. 

OBR forecasts  

  • Inflation will fall from 10.7 percent in the final quarter of 2022 to 2.9 percent by the end of 2023
  • CPI inflation to reduce by 0.7 percent in 2023-24
  • GDP expected to contract by 0.2 percent in 2023, rather than 1.4 percent as predicted five months ago. 
  • The economy will then grow every year in the forecast period, including 1.8 percent in 2024 up to 1.9 percent growth in 2027. 
  • Overall tax burden for the rest of parliament will be slightly than forecast in the OBR’s autumn assessment 
  • The unemployment rate will rise than less than 1 percent this year

Corporation Tax

To rise on 1 April from 19 percent to 25 percent, although only those businesses with profits over £250,000 will be liable for the full 25 percent.   

Businesses with profits between £50,000 and £250,000 will receive marginal relief.
Businesses with profits less than £50,000 will continue to pay the tax at 19 percent.

Capital Allowances 

Full expensing to run from 1 April 2023 till 31 March 2026 at a cost of £9 billion. It means every £1 invested in IT equipment, plant and machinery can be deducted in full and immediately from taxable profit. – almost 25p per every £1. The OBR states this will increase business investment by three percent for each year the policy is in place and the Chancellor has indicated his long-term ambition is to make full expensing permanent.   

The 50 percent first year allowance to be extended by a further three years till end of March 2026. This allows taxpayers to deduct 50 percent of the cost of other plant and machinery from their profits during the year of purchase. This includes long life assets such as solar panels and thermal insulation on buildings.

Research and Development 

R&D intensive small and medium-sized enterprises (SMEs), will be able to claim back £27 on every £100 spent on R&D.  Note a company is considered R&D intensive where its qualifying R&D expenditure is worth 40 percent or more of its total expenditure.

Simplification of the Tax System, including:  

  • Changes to the Enterprise Management Incentives (EMI) scheme from April 2023 to simplify the process to grant options and reduce the administrative burden on participating companies
  • Delivery of IT systems to enable tax agents to payroll benefits in kind on behalf of their clients 
  • Measures to simplify the customs import and export processes, including improvements to the Simplified Customs Declaration Process, and the Modernising Authorisations project.

Twelve investment zones, designed to galvanise innovation, will be established and benefit from £80 million in support for skills, infrastructure and tax relief.   

The zones are likely to be located in the following regions:  West Midlands; Greater Manchester; the Northeast; South Yorkshire; West Yorkshire; East Midlands; Teesside; Liverpool and at least one in Wales. 

Measures designed to encourage people back to work include:

  • Abolition of the pension’s lifetime allowance and an increase in the annual tax-free allowance from £40,00 to £60,000;
  • New apprenticeships targeted at the over-50s – ‘returnerships’ – which will focus on flexibility and previous experience to reduce training length through accelerated apprenticeships, together with the sector-based work academy programme placements and skills bootcamps
  • A £6.5 billion package to extend childcare allowance which will be phased in between April 2024 and September 2025 by which time all children will be eligible for up to 30hrs per week; 
  • Additional funding to schools and local authorities to increase the supply of wraparound care from September 2026;
  • More support will be provided to help people with long-term conditions get back into work and there will be a new programme to help disabled people secure work: 
  • Sanctions will be applied more rigorously to those who fail to meet strict work search requirements or choose not to take up a reasonable job offer.

Changes to the Shortage Occupation List

The Spring Budget’s policy paper states the government will ensure the UK labour market has access to skills and talent from abroad where needed. To help ease immediate labour supply pressures, the government will accept the Migration Advisory Committee’s (MAC) interim recommendations to add five construction occupations to the Shortage Occupation List (SOL), including carpenters and joiners (SOC 5315, RQF Level 3 – 5). This is in advance of its wider review of the SOL that will report later this year. 


  • The Energy Price Guarantee for households will remain in place for the next three months, ahead of the expected fall in prices from July;
  • The Climate Change Agreement scheme will be extended by a further two years allowing eligible businesses £600 million in tax relief on energy efficiency measures;
  • £20 billion will be made available to carbon capture and storage projects across the UK; 
  • Subject to consultation, nuclear power is to be classed as “environmentally sustainable”;
  • The government will launch ‘Great British Nuclear’ a programme to provide the nuclear industry with the same investment incentives as renewable energy.

For full details of the Spring Budget please click here

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