How will the March 2023 Budget affect you?
Today (15th March), UK chancellor Jeremy Hunt has outlined this year’s government budget. There have been a lot of new developments, with one of the biggest being more funding for free childcare for under 5s and scrapping the Lifetime Pension Allowance.
However, there were several missed opportunities to help support buyers, the UK housing market and property industry. There was a lot covered in this announcement and we have summarised some of the main points for you on this page.
In this blog, we will discuss all the key changes from today’s budget announcement and how you and your home and family may be affected.
In this section (How will the March 2023 Budget affect you?):
- What has been announced in the 2023 budget?
- How will the 2023 budget announcement affect business owners?
- How will the 2023 budget announcement affect families?
- How will the 2023 budget affect homeowners and buyers?
- When is the next budget 2023?
What has been announced in the 2023 budget?
The chancellor announced some key changes in today’s budget including:
- FREE childcare for one and two year olds in the UK (Children previously needed to be over 3 to qualify for this support) – this will cover up to 30 hours a week to support working parents from September 2025
- The governments Energy Price Guarantee that caps energy bills at £2,500 for standard usage has been extended until June 2023 with the current level of energy support for consumers
- Anyone paying for energy with a pre-payment meter will no longer have to pay a higher rate than direct debit customers because of the so-called ‘pre-payment premium’
- Inflation is expected to fall to 2.9% by the end of this year, according to The Office for Budget Responsibility
- A planned 11p rise in fuel duty has been cancelled, with the current 5p reduction frozen in place until 2024 at least
- The maximum amount you pay into a pension per year (Pension Annual Allowance) has been increased from £40,000 to £60,000 and the pension lifetime allowance has been scrapped completely (meaning no additional pension tax)
How will the 2023 budget announcement affect business owners?
Business owners will also be impacted long term by the changes announced today. Some key facts from todays announcement are:
- Businesses can now offset any UK investments against profits to reduce their tax bills
- Small and medium size businesses can now claim credit (worth around £27 for each £100 spent) provided more than 40% of the expenses for their business are for development and research
- There have been changes to corporation tax. Corporation tax charged on profits over £250,000 per year will increase to 25% from the previous level of 19% (starting from April)
How will the 2023 budget announcement affect families?
Families with young children will be pleased to hear about the new support measures in place that will provide childcare funding for 2-year-olds from April 2024 onwards. From September 2024 onwards, there will be funding for children 9 months and older.
Previously, this support was not available until a child was 3 years old, meaning many working parents had to budget for extra childcare costs on top of their typical bills.
Anyone on disability benefits will no longer need to complete a work capability assessment, meaning they can return to working without any concern they will lose their benefit entitlement.
How will the 2023 budget affect homeowners and buyers?
The continued support with energy bills will be welcome news across the UK, as many homeowners and renters have struggled with rising energy costs in the last year.
The government’s promise to continue their £2,500 Energy Price Guarantee until Summer could help households avoid energy bills up to £500 higher per year for now.
The government has however missed some of their potential opportunities to support new buyers and current homeowners. With dropping house prices and increasing mortgage rates, many mortgage experts have expressed frustration at things such as:
- Lack of housing reforms to help support older buyers (those purchasing later in life)
- No mention of additional support for first time buyers, not ideal considering the current challenges in the housing market
- No mention of any Stamp Duty changes or discounts to help incentivise and support new buyers
- Missed opportunity to address current shortfalls in UK property development
- Scrapped pension limits could tempt many people (higher earners) away from early retirement, keeping those later in life more active in the property market if they wish to be
When is the next budget 2023?
There should only be one budget announcement per year, but there can occasionally be additional announcements due to various reasons.
Last year, following Liz Truss making several changes to the key figures in Conservative Party we were given an Autumn ‘mini budget’ to indicate this new government’s plan for the economy. This had a big impact on UK mortgage and interest rates for several months, with rates only just starting to stabilise again.
So while generally this should be the key financial announcement of the year, it is best to keep your eyes peeled for any more announcements that could affect your family and home.