Chancellor Jeremy Hunt has delivered his spring Budget to parliament. Find out what the announcement means for UK businesses.
Hunt unveiled a series of measures to boost growth and make it easier for businesses to invest during his second major fiscal statement as Chancellor.
Some of the headline announcements were plans to boost pensions, expand free childcare and cut duty on fuel and draft beer.
Hunt said the Office for Budget Responsibility now predicts the UK economy will not enter a technical recession this year.
Here’s what we learned in the Budget.
However, businesses with profits of less than £50,000 will continue to pay corporation tax at 19%. Hunt said that only 10% of companies will pay the full 25% rate, adding that Britain will still have the lowest headline rate in the G7.
The chancellor revealed new policies to offset the rise in corporation tax.
“That means that every single pound a company invests in IT equipment, plant or machinery can be deducted in full and immediately from taxable profits,” he said.
The new enhanced credit offers an increased rate of relief for loss-making R&D intensive Small and Medium size Enterprises. It’s available for businesses that spend 40% or more of their total expenditure on R&D, allowing them to claim £27 for every £100 spent.
“It’s a £1.8 billion package of support helping 20,000 cutting-edge companies who day-by-day are turning Britain into a science superpower,” Hunt said.
For the audio-visual sector, the Chancellor said he would be introducing an expenditure credit with a rate of 34% for film, high-end television and video games, and 39% for the animation and children’s TV sectors.
For theatres, orchestras and museums, Hunt promised to extend for another two years their current 45% and 50% reliefs.
He told parliament that there are around one million vacancies in the economy – but excluding students there are seven million people of working age not in work.
To combat this, Hunt said he would increase the number of people who get financial health and career guidance ahead of retirement, from 8,000 to 40,000 a year.
He also announced a new kind of apprenticeship targeted at the over 50s who want to return to work. The so-called “returnships” would operate alongside skills group camps and sector-based work academies, he said.
As a further incentive, he promised to increase the pensions annual tax-free allowance by 50% from £40,000 to £60,000.
Hunt said current free childcare provision will be expanded and extended to children aged as young as nine months, or when a mother’s maternity leave ends.
Currently, eligible working parents with children aged three and four can claim up to 30 hours of free childcare per week for 38 weeks of the year, with all entitled to at least 15 hours per week.
But he said that all parents who work at least 16 hours per week will soon be able to claim 30 hours of childcare, for children aged between nine months and four.
Hunt also said he wants all schools to be able to offer childcare on either side of the school day by September 2026, to help more parents work.
“Disabled benefit claimants will always be able to seek work without fear of losing financial support,” Hunt said.
He announced the government will fund a new programme in England and Wales called Universal Support. This new voluntary employment scheme would mean the government spending up to £4,000 a person to help them find appropriate jobs and put in place the support they need. It will fund 50,000 places every single year.
The chancellor said there would be more help for those forced to leave work because of a health condition, such as back pain or mental health issues.
He announced a £400 million plan to increase the availability of mental health and musculoskeletal resources.
Hunt said that “those who can work should” and sanctions will be applied “more rigorously” to those who fail to meet strict work search requirements or “choose not to take reasonable offers of work”.
He said that for those working low hours, the government will increase the administrative earnings threshold from the equivalent of 15 hours to 18 hours at national living wage for an individual claimant.
But today he announced that, from August, the duty on draft products in pubs will be up to 11% lower than the duty in supermarkets.
He said this meant tackling two long-standing productivity issues: low business investment and high economic inactivity.
Successful applicants will have access to £80 million of support for a range of interventions including skills, infrastructure, tax reliefs and business rates retention.
He promised to extend the climate change agreement scheme for two years to allow eligible businesses £600 million of tax relief on energy efficiency measures.
Hunt said he was allocating up to £20 billion of support for the early development of Carbon Capture Usage and Storage. He said the measures will support up to 50,000 jobs and attract private sector investment.
At the same time, the government will adopt a swift new approval process for medicines and medical devices to ensure the UK becomes a global centre for their development.
He said today’s change will make the UK an even more exciting place to invest.
The government will also work “at pace” with the intellectual property office to provide clarity on IP rules so that generative AI companies can access the material that they need.
The Chancellor also promised to award a prize of £1 million every year for the next 10 years to the person or team that does the most groundbreaking British AI research.
Ready for more from UKBF? Why not upgrade to a Business Membership? You can make the most of exclusive benefits including premium forums, partner offers, member-only content and more.
Hunt unveiled a series of measures to boost growth and make it easier for businesses to invest during his second major fiscal statement as Chancellor.
Some of the headline announcements were plans to boost pensions, expand free childcare and cut duty on fuel and draft beer.
Hunt said the Office for Budget Responsibility now predicts the UK economy will not enter a technical recession this year.
Here’s what we learned in the Budget.
Corporation Tax rise to proceed as planned
The chancellor announced that he would be proceeding with the planned rise in corporation tax, from 19% to 25%.However, businesses with profits of less than £50,000 will continue to pay corporation tax at 19%. Hunt said that only 10% of companies will pay the full 25% rate, adding that Britain will still have the lowest headline rate in the G7.
The chancellor revealed new policies to offset the rise in corporation tax.
Full capital expensing for the next three years
Hunt announced a policy of full capital expensing until April 2026, and said he planned to make it permanent “as soon as we can responsibly do so”.“That means that every single pound a company invests in IT equipment, plant or machinery can be deducted in full and immediately from taxable profits,” he said.
R&D tax credits
The chancellor also unveiled a more robust R&D tax credit scheme for smaller, research-intensive companies.The new enhanced credit offers an increased rate of relief for loss-making R&D intensive Small and Medium size Enterprises. It’s available for businesses that spend 40% or more of their total expenditure on R&D, allowing them to claim £27 for every £100 spent.
“It’s a £1.8 billion package of support helping 20,000 cutting-edge companies who day-by-day are turning Britain into a science superpower,” Hunt said.
For the audio-visual sector, the Chancellor said he would be introducing an expenditure credit with a rate of 34% for film, high-end television and video games, and 39% for the animation and children’s TV sectors.
For theatres, orchestras and museums, Hunt promised to extend for another two years their current 45% and 50% reliefs.
Measures to boost the workforce
An enterprise economy can only grow if it can hire the people it needs, Hunt said.He told parliament that there are around one million vacancies in the economy – but excluding students there are seven million people of working age not in work.
Helping people over 50 back into the workforce
The Chancellor said the UK has 3.5 million people of pre-retirement age over 50 who are not part of the labour force, an increase of 320,000 since the start of the pandemic.To combat this, Hunt said he would increase the number of people who get financial health and career guidance ahead of retirement, from 8,000 to 40,000 a year.
He also announced a new kind of apprenticeship targeted at the over 50s who want to return to work. The so-called “returnships” would operate alongside skills group camps and sector-based work academies, he said.
Pension reforms
While Hunt had been expected to increase the pension lifetime allowance from its current level of £1 million, he went one step further and abolished it altogether. Hunt said he didn’t want any doctor to retire early because of the way pension taxes work.As a further incentive, he promised to increase the pensions annual tax-free allowance by 50% from £40,000 to £60,000.
Childcare reforms to help parents back to work
The chancellor announced a series of childcare reforms to enable more parents to get back into work.Hunt said current free childcare provision will be expanded and extended to children aged as young as nine months, or when a mother’s maternity leave ends.
Currently, eligible working parents with children aged three and four can claim up to 30 hours of free childcare per week for 38 weeks of the year, with all entitled to at least 15 hours per week.
But he said that all parents who work at least 16 hours per week will soon be able to claim 30 hours of childcare, for children aged between nine months and four.
Hunt also said he wants all schools to be able to offer childcare on either side of the school day by September 2026, to help more parents work.
Helping people with a disability to work
As part of reforms to disability benefits, Hunt said he will abolish the work capability assessment in Great Britain and separate benefit entitlement from an individual's ability to work.“Disabled benefit claimants will always be able to seek work without fear of losing financial support,” Hunt said.
He announced the government will fund a new programme in England and Wales called Universal Support. This new voluntary employment scheme would mean the government spending up to £4,000 a person to help them find appropriate jobs and put in place the support they need. It will fund 50,000 places every single year.
The chancellor said there would be more help for those forced to leave work because of a health condition, such as back pain or mental health issues.
He announced a £400 million plan to increase the availability of mental health and musculoskeletal resources.
Hunt said that “those who can work should” and sanctions will be applied “more rigorously” to those who fail to meet strict work search requirements or “choose not to take reasonable offers of work”.
He said that for those working low hours, the government will increase the administrative earnings threshold from the equivalent of 15 hours to 18 hours at national living wage for an individual claimant.
Boost for pubs
In December, Hunt extended the alcohol duty freeze until 1st August, after which duties would have gone up in line with inflation.But today he announced that, from August, the duty on draft products in pubs will be up to 11% lower than the duty in supermarkets.
Tackling low business investment and high economic inactivity
The chancellor said the government wanted to “build Europe’s most dynamic economy”.He said this meant tackling two long-standing productivity issues: low business investment and high economic inactivity.
New investment zones
Hunt said the government will deliver 12 new investment zones which would be “12 potential Canary Wharfs”. The following areas have been identified as having the potential to host one:- West Midlands
- Greater Manchester
- North East
- South Yorkshire
- West Yorkshire
- East Midlands
- Teesside
- Liverpool
Successful applicants will have access to £80 million of support for a range of interventions including skills, infrastructure, tax reliefs and business rates retention.
Business energy relief
An enterprise economy needs low taxes but it also needs cheap and reliable energy, Hunt said.He promised to extend the climate change agreement scheme for two years to allow eligible businesses £600 million of tax relief on energy efficiency measures.
Hunt said he was allocating up to £20 billion of support for the early development of Carbon Capture Usage and Storage. He said the measures will support up to 50,000 jobs and attract private sector investment.
Deregulating the innovation economy
Thanks to the “Brexit autonomy”, Hunt said he wanted to deregulate high-growth sectors and promised to reform the regulations around medicines and medical technologies.Life sciences sector
From 2024, Hunt said the life sciences sector will move to a different model which will allow rapid, often near automatic sign-off for medicine and technologies already approved by trusted regulators in other parts of the world such as the USA, Europe and Japan.At the same time, the government will adopt a swift new approval process for medicines and medical devices to ensure the UK becomes a global centre for their development.
He said today’s change will make the UK an even more exciting place to invest.
Artificial intelligence
Hunt said the government will launch an AI sandbox to trial new faster approaches to help innovators get cutting-edge products to market.The government will also work “at pace” with the intellectual property office to provide clarity on IP rules so that generative AI companies can access the material that they need.
The Chancellor also promised to award a prize of £1 million every year for the next 10 years to the person or team that does the most groundbreaking British AI research.
Energy bills support
The Chancellor confirmed the energy price guarantee will be extended for another three months. He added that households with prepayment meters will be charged the same as those paying via direct debit.Fuel duty increase delayed
The Chancellor said the planned rise in fuel duty this April has been delayed again. He said that the 5p reduction would be extended by 12 months.Ready for more from UKBF? Why not upgrade to a Business Membership? You can make the most of exclusive benefits including premium forums, partner offers, member-only content and more.
