Source:  The QuickBooks Team

Chancellor Jeremy Hunt has delivered his Spring Statement amidst the backdrop of a cost of living crisis and the ongoing challenge of inflation.

It appears there’s reason to be hopeful as the Chancellor announced that the UK economy is performing better than expected. The OBR forecasts that the economy will contract by 0.2% this year, but we’ll avoid recession in 2023, before returning to growth in 2024. Moreover, the rate of inflation is predicted to fall to 2.9% by year end, if this happens it will enable businesses to plan with greater certainty.

Some of the key points from the Spring Statement that may impact your clients are outlined below.

Small businesses investment allowance increased

The Annual Investment Allowance for small businesses has been increased to £1m, meaning 99% of all businesses can deduct the full value of investments from the previous year’s taxable profits.

Super deduction replaced

The super deduction introduced during the pandemic will end this month. It will be replaced by full-expensing, meaning companies incurring qualifying expenditure when purchasing new plant and machinery on or after 1 April 2023 will be able to claim new temporary first-year allowances. We suggest utilising your expertise and knowledge to help your clients make the most of these allowances.

It’s hoped these initiatives will help offset the rise in corporation tax that comes into effect in April 2023.

12 new investment zones introduced

The Chancellor wants to create “Canary Wharf” investment zones across 12 areas in the UK. Each investment zone will receive £80 million in funding and the identified areas are as follows: West Midlands, Greater Manchester, the North East, South Yorkshire, West Yorkshire, East Midlands, Teesside and Liverpool. There will also be at least one in each of Scotland, Wales and Northern Ireland.

Energy support extended by three months

The Energy price guarantee that caps typical household energy bills at £2,500 was set to expire on 1 April 2023. This has been extended for a further three months and will now expire in June 2023.

Fuel duty cut renewed for a further year

Fuel duty will be frozen and the 5p reduction will be maintained.

Lifetime allowance on pensions abolished

The Chancellor has removed the lifetime allowance on pensions, meaning the amount an individual can accumulate in their pension pot before paying additional tax is no longer applicable. The Government has promised this will come into effect at the earliest possible opportunity during a future finance bill.

Furthermore, the amount workers can save into their pension before paying any tax at all has risen to £60,000 from £40,000.

You can read the Spring Statement in full here on the Gov website.

Keep up the great work

We want to say a massive thank you to our Accountants family, it’s been a challenging few years for the UK business sector, and your guidance has helped a number of businesses survive in such unprecedented times. Accountants have been a source of truth for their clients, and we’re lucky to have such experts on hand to help steer the bedrock of the UK economy through these challenges. It’s because of you that thousands of small, medium and large businesses can hopefully look forward to brighter days ahead.