The first Spring budget from Jeremy Hunt will help working families struggling with childcare costs and those looking to boost pension pots in preparation for retirement.
With inflation at record highs, the government is trying to avoid the UK economy going into recession in 2023 and protect working families in these difficult times.
Under the energy price guarantee, the government is limiting the typical household energy bill to £2,500 a year until July, by which time it is hoped that the wholesale prices will have dropped to a more sustainable level and therefore the price cap is no longer required.
A welcome relief to those families who battle with the cost of childcare. Having had two children go through nursery – I feel parent’s pain. With 30 hours of free childcare for three to four year olds, the introduction of 15 hours free childcare for two year olds in April 2024 and from September 2024 for 9 month year olds the government is encouraging parents to get back to work. My worry with this is how this is going to be fulfilled with local nurseries having waiting lists. Do we have the capacity in nurseries?
With an increase in tax-free yearly allowance for pension pots from £40,000 to £60,000 and the removal of the lifetime limits, individuals will be able to save more in preparation for the retirement. Individuals can finally save for the future without worrying about an additional tax charge. This may be too late for some, but takes the restriction away for the next generation.
It was confirmed that the main rate of Corporation tax paid by businesses on profits over £250,000 increases from 19% to 25% from 1 April 2023, and that profits between £50,000 and £250,000 will pay between 19% to 25%. Despite the increase in tax, the UK still continues to have the lowest corporation tax rate in the G7. Companies are able to deduct investment in new plant, machinery and technology to lower the taxable profits.
Overall, the government is trying to boost the economy to prevent recession and continue to grow in the years to come. We will see whether the UK economy stays out of recession and moves forward in the next few years.
Posted by Mark Pearson
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