Spring Budget Predictions 2023
10 March 2023
There is much anticipation in advance of Wednesday’s Spring Budget 15 March. Last time, the Chancellor Jeremy Hunt carried the ‘red box’ into the House of Commons, he was only in the post a month and was focused on reversing his predecessor’s infamous announcement in September 2022. Whilst there have been little leaks on what will be discussed, at the end of January, the Chancellor set out his four pillars for growth as Enterprise, Education, Employment and Everywhere in a speech.
We have looked at these pillars from what could happen from a tax perspective below:
- The main rate of corporation tax increasing from 1 April to double that of our neighbours in the Republic of Ireland, has been another cost of businesses operating competitively here in Northern Ireland. This was something that the Prime Minister was asked directly about on his visit to Coca-Cola in Lambeg, although a typical politicians answer, there was some hope that the Spring Budget would provide some clarity. Whilst not expecting a change of rate immediately, we could see a corporate tax roadmap that outlines future tax cuts to corporation tax (towards his stated goal of giving the UK “the most competitive tax regime of any major country”) – perhaps over a period of three or five years.
- With the super-deduction of 130% for qualifying capital expenditure ending on 31 March, there are rumours that a more generous capital allowances regime could be announced. This would be very much welcomed, particularly by those business who have ordered plant and machinery to avail of the super-deduction but to have the supply chain crisis significantly delaying their capital goods delivery time and subsequent tax relief.
- The Chancellor is looking to re-create ‘silicon valley’ in the UK and the future of work will need to ensure that our education system here is fit for purpose. Employers could see increased reliefs for liaising with education providers or bringing in more apprenticeship schemes.
- Everyday we are talking to clients across Northern Ireland in many different sectors, who all have one common issue – recruitment and retention of staff. A consultation in relation to National Insurance contributions for those returning to work is very likely but many employers would prefer additional support as pressure to increase wages as a result of the cost of living crisis continues.
- The latest OECD changes, particularly around Pillar One and Pillar Two, are always a guaranteed feature. The UK’s rate of tax is already in excess of the global minimum rate of 15% tax, so focus will be on the Pillar One proposals in relation to the taxation of the digital economy.
- As usual, there will be increased anti-avoidance legislation for globally active entities and some clarity on the new Transfer Pricing ‘audit trail’ requirements, would be welcome.
Keep watch for the upcoming BDO analysis of the budget on Wednesday 15 March!