Yesterday (March 15) Jeremy Hunt put forward his Spring Budget, outlining his 4 pillars for economic growth – enterprise, employment, education and everywhere - with a strong emphasis on getting Britain “back into work”.
We’ve narrowed down 6 key aspects of the Spring Budget that employers need to know…
Rise in Corporation Tax to incentivise investment
The rise of Corporation tax from 19% to 25% will go ahead but Hunt insists that just 10 percent of UK biz will pay the 25% rate. His reasoning came from comparing our capital investment and productivity to be lower than countries like France & Germany and that “our corporation tax did not incentivise investment as effectively as countries with higher headline rates.”
Alongside this Hunt revealed a new “full expensing” scheme where support and investment will also be provided in the form of 100 % first year capital allowances, allowing businesses to deduct the full cost of IT equipment and machinery from pre-tax profits.
Reduced childcare costs to support working parents
With the aim to get parents back in to work hunt declared that “if we really want to remove the barriers to work we need to go further” offering 30 hours of free childcare for every child over the age nine months with working parents.
This would be available by September 2025, and introduced in 2 phases:
April 2024 – 15 hours free childcare for working parents of 2-year-olds
September 2024 – 15 hours free childcare for working parents of children aged 9 months to 3 years.
Funding will also go towards schools and local authorities to increase wraparound care with the aim to remove the hurdles caused by current limited availability for parents of school-age children.
Lower pension tax to keep highly skilled in work
The chancellor announced an increase in pensions tax-free annual allowance from £40,000 - £60,000 to incentivise skilled workers to stay in work, stating that “no one should be pushed out of the workforce for tax reasons.”
This extends to also abolishing the lifetime allowance altogether, this is huge for workers like Doctors, as this means they will no longer be forced to retire early because of pension tax, helping to retain senior doctors in the NHS to not only provide care but help mentor junior colleagues – Doctors welcome the government’s decision.
'Returnerships' for over 50s
A new type of apprenticeship is set to be launched to attract “older workers” over 50, back in to the labour market: Returnerships.
These Returnerships aim to refine existing skills programmes to make them accessible for older workers over 50, with a focus on giving people the support they need to find a recognisable path back into work.
More support for occupational health
Hunt’s employment plans also recognise those forced to leave work because of a condition such as back pain or mental health issue, hunt believes that “we should give them support before they end up leaving their job.”
This £406m plan to tackle health issues keeping people out of work will focus on mental health, musculoskeletal conditions and cardiovascular disease and will involve two new consultations on how to improve “instant availability” for the support – stating that employers will have a key role to play in this, with double funding offered for SMEs.
Universal Support scheme to help disabled into work
The chancellor's plans offer further support for getting into work in particular for those with disabilities and or long-term sickness, claiming that “With Zoom, Teams and new working models that make it easier to work from home, this is possible now more than ever”.
A voluntary employment scheme for disabled people and those with health conditions will be funded in England & Wales. This ‘Universal Support will offer up to £4,000 per person and will invest support 50,000 per year.
These plans also include abolishing the work capability assessment to support claimants back into work without fear of losing their financial support.
These key points, alongside hunt’s draft of reforms aimed at helping the economically inactive and those out of the labour market back into work will hopefully address recruitment and retention issues many employers have been facing.
For how the Spring Budget 2023 affects the technology sector, read more here.