Jeremy Hunt has delivered his first Budget as Chancellor, after revealing sweeping tax rises and spending cuts in 2022. Has he attempted to soften the blow for already-stretched households this year? Read on to find out the winners and losers of the Budget 2023.
Mr Hunt has handed a huge boost to wealthy retirees by abolishing the lifetime tax-free pension allowance.
The so-called “lifetime allowance” had previously been frozen at £1.07m until 2028, but the Chancellor abolished it altogether in a bid to encourage over-50s back to the workforce.
The £40,000 annual tax-free allowance for pension contributions has also increased to £60,000.
He said “no-one should be pushed out of the workforce” for tax reasons.
Parents of children under five in England will be entitled to 30 hours of free childcare a week – a scheme which previously only applied to families with three and four-year-olds.
The expansion could save parents up to £6,500 a year and is expected to cost the Government £4bn – but failure to implement the reform effectively could result in higher costs, longer waiting lists and fewer nurseries, experts have warned.
The Chancellor said eligible parents would be able to access free care when their maternity or paternity leave ends – from when a child is nine months until age five. But the funding will be released in stages.
Parents of two-year-olds will be able to access 15 hours a week from April 2024 and parents of children aged nine months and above will be able to access it from September 2024. Mr Hunt said all eligible parents of children under five will be able to access 30 hours a week from September 2025.
Mr Hunt also increased the staff-to-child ratios for two-year-olds in childcare, from four children to five per staff member. Although the new ratios will be optional.
Energy bill payers
All households will benefit from the energy price guarantee being maintained at its current level of £2,500 for an extra three months, until June. Falling wholesale gas prices have made the scheme cheaper to maintain for the Treasury.
The Chancellor has scrapped the planned reduction in support which would have pushed the average bill up by £500 to £3,000 from April.
It means households will not feel the full force of Ofgem’s price cap between April and June – which will become £3,280 – helping to bridge consumers into the summer, when energy bills are expected to fall to around £2,100.
Mr Hunt has also reformed energy bills so that households on pre-payment meters will pay the same for their energy than those on “comparable” direct debits.
The 5p cut to petrol and diesel duty has been extended for another year, having originally been due to end later this month.
Mr Hunt also followed his predecessors by freezing fuel duty and scrapping an inflation-linked rise in April, which would have added 7p to the price of a litre of fuel. The Government estimated it would save the average household £100 in the next year.
An additional £200m has also been ringfenced for local authorities to fix pot holes across the country.
Mr Hunt has frozen the duty on average strength draught beer sold in pubs across the UK. The Chancellor said it would mean the duty on draught products in pubs was up to 11pc lower than the duty in supermarkets from August.
He added: “British ale is warm, but the duty on a pint is frozen.”
The Chancellor confirmed a £63m fund to help keep leisure centers and swimming pools “afloat” and offset inflated heating and energy bills.
From next year qualifying care givers will see their tax-free allowance rise from £10,000 to £18,000, in a move the Chancellor said supported the “crucial role that foster parents play” in society.
Mr Hunt has stood by his decision to raise the rate of corporation tax from 19pc to 25pc next month, despite opposition from the Tory back benches.
The full force of this tax rise will hit businesses with profits of more than £250,000. Companies with profits of between £50,000 and £250,000 will get marginal relief.
For those with profits of less than £50,000, there will be no change – they will continue to pay corporation tax at 19pc.
To soften the blow Mr Hunt announced a new policy of “full expensing” for businesses, meaning every pound invested in IT equipment, plant and machinery can be deducted “in full and immediately” from taxable profit. This is a three-year policy, but Mr Hunt said he wanted to make it permanent eventually at a cost of £9 billion a year.