Chancellor of the Exchequer Promises a ‘Budget for Growth’
The 2023 Spring Statement by the Chancellor labelled a ‘Budget for Growth’ made heavy references to the following core government priorities:
There was also an update on the overall economic picture and key metrics following the previous November 2022 Budget, described as ‘a Budget for Stability’, which followed the short-lived Truss administration’s budgetary announcements.
Areas of the Budget directly relevant to the hire industry include the measures to address economic inactivity. Whether encouraging older people, those with disabilities, people on benefits or facing prohibitive childcare costs, to overcome barriers and either remain in the workforce or to return, there will be ‘Returnships‘ apprenticeship, adapted from existing training programmes, making them more attainable by over 50s.
The Chancellor made a raft of announcements on economic support in geographical areas, moving powers and remit from Local Enterprise Partnerships to Mayoral Combined Authorities. Funding will be put towards the development of sustainable transport, economic regeneration and other ‘Levelling Up’ priorities. 12 new Investment Zones will be designated across the UK, four of which will cover Scotland, Wales and Northern Ireland.
HAE EHA is calling for a more dynamic approach to capital allowances and reliefs. Capital investments made for leasing and rental purposes are mostly excluded based on a regime dating from the 1980s. While this rule is not being abolished today, there is a commitment to consult with the business community on how eligibility might be expanded, with safeguards for preventing avoidance of such investments. This is a welcome acknowledgement that the current arrangements are a barrier to growth, particularly in making the transition to greener equipment.
Therefore, the 100% Full Expensing incentive until 2026 (replacing the Super Deduction this April) announced for an initial three years (but may become permanent) does not include capital investment in plant and machinery for leasing purposes, this may change, and HAE EHA will take part in discussions with officials.
The increase in Corporation Tax to 25%, for businesses with turnover of £250K and above is going ahead from this April. The Chancellor’s Autumn Statement is set to include measures on the Stock Exchange and access to investment (pension funds etc.).
Finally, the fuel duty freeze is extended, and the Lifetime Pension Allowance abolished (and annual tax-free allowance is increased to £60K) making it easier to stay in work.
If you have any questions about the Spring Budget 2023, or matters of government in general please contact Public Affairs Manager Mark Bradshaw on 0121 380 4621.
Spring Budget 2023 Useful Links
For a full report on the Chancellor’s UK Spring Budget, and links to further reading on the issues named in this article please click the links provided below:
Guidance on Full Expensing (replacing the Super Deduction)
An overview of tax policies, useful for those in a financial role
Full expensing policy for companies investing in plant and machinery
The Spring Budget 2023 Media Factsheet (a concise summary)
Wording on the new Full Expensing Policy from the HM Treasury Spring Budget 2023 ‘Red Book’
Business investment and Tax
Capital allowances: Full expensing – From 1st April 2023 until 31st March 2026 investments made by companies in qualifying plant and machinery will qualify for a 100% first-year allowance for main rate assets. This means companies across the UK will be able to write off the full cost in the year of investment, known as full expensing. Companies investing in special rate (including long life) assets will also benefit from a 50% first-year allowance in the year of investment. Expenditure on plant or machinery for leasing is excluded from first -year capital allowances due to longstanding concerns about abuse and wide scope for error. The government will work with industry to identify possible policy solutions that appropriately mitigate these risks.