Spring Budget Recap

Posted on: 1st Jun 2023

Jeremy Hunt delivered the Spring Budget on 15 March declaring it “A Budget for Growth.” The fiscal update included a range of new measures, but kicked off with the latest economic projections from the Office for Budget Responsibility (OBR):

  • The UK economy is expected to contract by 0.2% this year, with growth then predicted to hit 1.8% in 2024 and 2.5% in 2025, a technical recession is expected to be avoided in 2023
  • Inflation is predicted to fall from an average rate of 10.7% in Q4 2022 to 2.9% by the end of this year. This decline is partly due to the three-month extension to the household Energy Price Guarantee (EPG), which the government confirmed on 15 March.

The Chancellor’s strategy for growth focuses on four pillars ‘Everywhere, Enterprise, Employment and Education.’ Key areas of focus within these pillars include:

  • Investment for ‘Levelling-Up’ initiatives
  • Providing the right conditions for businesses to succeed
  • New measures to get people back to work, including childcare support.

Pensions

The spotlight fell on pensions. To encourage over-50s to extend their working lives, the government is increasing tax relief limits on pension contributions and pots:

  • The Annual Allowance will be raised from £40,000 to £60,000 from April 2023; the Lifetime Allowance (LTA) charge will be removed from April 2023, and the LTA will be abolished from April 2024
  • The maximum amount that can be accessed tax free (Pension Commencement Lump Sum) will be frozen at its current level of £268,275 (25% of current LTA)
  • From April, the minimum Tapered Annual Allowance (TAA) and the Money Purchase Annual Allowance (MPAA) will increase from £4,000 to £10,000. The adjusted income threshold for the TAA will also rise, from £240,000 to £260,000.

In addition, previously announced State Pension increases from April 2023 are as follows:

  • Basic State Pension – increase to £156.20 per week
  • Full new State Pension – increase to £203.85 per week.

The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated. The Financial Conduct Authority (FCA) does not regulate Will writing, tax and trust advice and certain forms of estate planning.

It is important to take professional advice before making any decision relating to your personal finances. Information within this newsletter is based on our current understanding of taxation and can be subject to change in future. It does not provide individual tailored investment advice and is for guidance only. Some rules may vary in different parts of the UK; please ask for details. We cannot assume legal liability for any errors or omissions it might contain. Levels and bases of, and reliefs from, taxation are those currently applying or proposed and are subject to change; their value depends on the individual circumstances of the investor. The value of investments can go down as well as up and you may not get back the full amount you invested.

The past is not a guide to future performance and past performance may not necessarily be repeated. Changes in the rates of exchange may have an adverse effect on the value or price of an investment in sterling terms if it is denominated in a foreign currency. Taxation depends on individual circumstances as well as tax law and HMRC practice which can change.

The information contained within this newsletter is for information only purposes and does not constitute financial advice. The purpose of this newsletter is to provide technical and general guidance and should not be interpreted as a personal recommendation or advice.

The Financial Conduct Authority does not regulate advice on deposit accounts and some forms of tax advice.

All details are correct at time of writing – March 2023.

Land driving surge in UK’s net worth

Recent data from the Office for
National Statistics (ONS) shows that the UK’s net worth rose by £1trn in 2021, to total £11.8trn, the largest annual increase on record (9.2%). This rise can be attributed to the increasing value of land, accounting for over 60% of net worth. Aligned with this, the data shows that households’ net worth grew to £12.3trn in 2021, 7.6% up on the previous year, representing the strongest growth since 2016. ‘Land continues to be the largest asset driving more than half of the sector’s growth,’ according to ONS.

Crypto clampdown

The UK government has unveiled plans to ‘robustly regulate’ cryptocurrency market activities like trading and lending by bringing the regulation of crypto assets closer to that of traditional
finance. The Treasury confirmed, ‘We remain steadfast in our
commitment to grow the economy and enable technological change and innovation – and this includes crypto asset technology. But we
must also protect consumers who are embracing this new technology – ensuring robust, transparent,and
fair standards.’

A consultation has been launched which runs until 30 April 2023; once legislation is made, the Financial Conduct Authority (FCA) will consult on its
detailed rules for the sector.

1. ONS, 2023