17th March, 2023

The Chancellor of the Exchequer, Jeremy Hunt, recently announced the new 2023 Spring Budget - a fiscal statement with the purpose of providing an update on the UK economy, as well as plans for the likes of taxes and spending. So, what points did he cover and what does this mean for you?

Energy Price Guarantee extended for a further three months

As we approach April, marking the end of the energy discount provided by the government, many waited to hear more about the seemingly ever-rising gas and electric costs. In his statement, the Chancellor announced that the Energy Price Guarantee (EPG) will be extended for a further three months, meaning the cap will remain at £2,500 – saving a typical household £160, according to the Treasury.

UK households are forecast to see a decrease in their energy costs when Ofgem next change their prices, as they drop below the current EPG rates. While this is a positive sign, Ofgem have expressed that it’s unlikely we’ll see prices return to the same level as before the energy crisis. Although at this point, we’re sure many can agree that any saving is welcomed, no matter how big or small!

Plans to get rid of the lifetime allowance for pensions and increase tax limits

The lifetime allowance (LTA) currently limits the tax-free amount that UK workers can save into their pension at £1.07m. However, in a move to encourage older generations to return to or remain in work, the Chancellor announced that the LTA charge will be removed as of April 2023 and abolished entirely from April 2024.

The Chancellor also announced changes to pension tax limits, including the standard annual allowance being increased from £40,000 to £60,000 at the start of the 2023-24 tax year on 6th April. This means that you can save up £60,000 into your pension per annum whilst still benefiting from tax relief.

Extra help offered to parents of young children

One of the biggest announcements from the budget were the changes to childcare support across the UK, in an effort to help more parents return to work.

These changes will see funded childcare eventually increase to 30 hours a week, 38 weeks a year, for eligible households (where both adults work at least 16 hours a week) from the time that maternity care ends until the child is four years old.

To ensure that there is enough supply, this change will take place in phases over the next couple of years. As of April 2024, working parents of children aged two and above will receive 15 hours of free childcare a week. Then, in September 2024, these 15 hours will be offered to all parents of children over nine months. Finally, in September 2025, 30 hours of free childcare will be offered to all eligible households with children under the age of five.

For parents of children who are already in school, the Chancellor also announced new funding for schools and local authorities to increase ‘wraparound care’, which is provided both before and after typical school hours. This will give parents the option to drop their children off at school between 8am and 6pm, allowing for more flexibility with work hours.

However, as teachers up and down the UK continue to strike, Hunt did not mention anything of public sector pay for industries such as education. The National Governance Association (NGA) has stated that the news is ‘not good enough’ and continued disputes over pay will contribute to a chronic shortage of teachers and support staff, leading many to question where the resources for extra childcare and wraparound care will come from.

At least we can still enjoy a pint at the pub…

During the budget statement, it was announced that Draught Relief will increase from 5% to 9.2% for qualifying beer and cider products. Taking effect from 1st August 2023, this will mean that the tax duty paid on pints pulled in the pub will be about 11p less than that paid in supermarkets, with hopes to help establishments compete with supermarket alcohol – a move that has so far been welcomed by the industry.

With that being said, duties on alcohol are still set to increase in line with inflation. These duties, based on the alcoholic strength of a drink, won’t come as good news for those who usually opt for a glass of wine, as the largest duty increase in over 50 years will see wine will increase by an average of 44p per bottle.

As a result of the actions set to take place following the budget statement, Hunt announced that the Office for Budget Responsibility now believes that the UK economy will avoid a ‘technical recession’. But as bills continue to rise and industries such as education, health and rail continue to strike, it’s clear that financial uncertainty remains a worry for thousands of households across the UK.


Written by: Shannan Errington

*Please note that the above information has been gathered through secondary research. The information provided is not based on our opinion. You should seek further guidance and information before making an informed decision.

Sources:
https://www.independent.co.uk/news/uk/politics/budget-2023-time-jeremy-hunt-childcare-pensions-b2301041.html
https://www.which.co.uk/news/article/spring-budget-2023-key-announcements-ab4Oj3w32RGr
https://www.ofgem.gov.uk/publications/ofgem-announces-latest-quarterly-price-cap-update
https://www.standard.co.uk/business/spring-budget-2023-beer-draught-relief-wetherspoons-pubs-b1067539.html
https://www.nga.org.uk/News/NGA-News/March-2023/Not-enough-good-news-for-schools-from-spring-budge.aspx