“The so-called Budget for Growth has some sensible and welcome measures to stimulate investment and employment that will be largely welcomed by business. According to our Business Outlook Tracker research completed ahead of the Budget, 77% of mid-market business leaders were confident that the announcement would deliver the necessary support. The Spring Budget measures ticked off some of the top wish list demands; levelling up and skills attraction and development – both of which were addressed by the Chancellor today. While tax certainty wasn’t fully addressed, there were some positive measures to encourage investment in capital expenditure.
“In a range of measures to stimulate economic growth, the Chancellor returned to the four ‘E’ pillars of Employment, Education, Enterprise and Everywhere. A primary focus of this strategy is to enable and support return to work for a significant portion of the 6.7 million working-aged people categorised as ‘economically inactive’ (ONS March 2023). The government’s employment strategy will focus support on those groups where inactivity levels are higher and where support is most needed, including the long-term sick and disabled, welfare recipients, people aged over 50, and parents.
“Hunt’s rabbit in the hat was the abolition (rather than the trailed increase) of the lifetime allowance cap for pensions – which is currently at £1.07m. This measure, along with the rise in the tax-free annual allowance (from £40,000 - £60,000), is designed to encourage those under retirement age to stay in work longer. Another welcome measure was the extension of 30 hours of free weekly childcare for working parents to cover children aged between nine months and three, alongside wrap-around care, though it will take a few years until the full impact is felt.
“On Enterprise, the Chancellor confirmed that the super-deduction would be followed by full expensing, which allows companies subject to corporation tax to write off 100% of their total investments in qualifying plant and machinery (with a 50% write off for special rate assets) in the year of expenditure against their profits subject to tax – a strong statement towards encouraging investment.
“The Chancellor has also gone some way to fill the gap left by the reduced SME R&D relief announced in the Autumn Statement. R&D intensive SMEs will be able to claim a credit worth £27 for every £100 they spend, however - as always - the devil is in the detail. The relief is expected to only apply in loss making scenarios where at least 40% of expenditure is on R&D. We would expect early-stage startups to benefit from this but, as they scale and overheads increase, many will lose the higher rate of support.
“Overall, in the Budget for Growth there were some big announcements that should go a little way towards sugaring the bitter pill of the incoming rise in Corporation Tax. Mid-market businesses called for measures that would ensure stability and the Chancellor took positive steps towards this.”
News release
Spring Budget 2023: Head of Tax response
15 Mar 2023
Karen Campbell-Williams, Head of Tax at Grant Thornton UK LLP, said:
“The so-called Budget for Growth has some sensible and welcome measures to stimulate investment and employment that will be largely welcomed by business. According to our Business Outlook Tracker research completed ahead of the Budget, 77% of mid-market business leaders were confident that the announcement would deliver the necessary support. The Spring Budget measures ticked off some of the top wish list demands; levelling up and skills attraction and development – both of which were addressed by the Chancellor today. While tax certainty wasn’t fully addressed, there were some positive measures to encourage investment in capital expenditure.
“In a range of measures to stimulate economic growth, the Chancellor returned to the four ‘E’ pillars of Employment, Education, Enterprise and Everywhere. A primary focus of this strategy is to enable and support return to work for a significant portion of the 6.7 million working-aged people categorised as ‘economically inactive’ (ONS March 2023). The government’s employment strategy will focus support on those groups where inactivity levels are higher and where support is most needed, including the long-term sick and disabled, welfare recipients, people aged over 50, and parents.
“Hunt’s rabbit in the hat was the abolition (rather than the trailed increase) of the lifetime allowance cap for pensions – which is currently at £1.07m. This measure, along with the rise in the tax-free annual allowance (from £40,000 - £60,000), is designed to encourage those under retirement age to stay in work longer. Another welcome measure was the extension of 30 hours of free weekly childcare for working parents to cover children aged between nine months and three, alongside wrap-around care, though it will take a few years until the full impact is felt.
“On Enterprise, the Chancellor confirmed that the super-deduction would be followed by full expensing, which allows companies subject to corporation tax to write off 100% of their total investments in qualifying plant and machinery (with a 50% write off for special rate assets) in the year of expenditure against their profits subject to tax – a strong statement towards encouraging investment.
“The Chancellor has also gone some way to fill the gap left by the reduced SME R&D relief announced in the Autumn Statement. R&D intensive SMEs will be able to claim a credit worth £27 for every £100 they spend, however - as always - the devil is in the detail. The relief is expected to only apply in loss making scenarios where at least 40% of expenditure is on R&D. We would expect early-stage startups to benefit from this but, as they scale and overheads increase, many will lose the higher rate of support.
“Overall, in the Budget for Growth there were some big announcements that should go a little way towards sugaring the bitter pill of the incoming rise in Corporation Tax. Mid-market businesses called for measures that would ensure stability and the Chancellor took positive steps towards this.”
Experts / Authors
Karen Campbell-Williams
I joined the firm in July 1994 and became a tax partner in 1997, and later head of tax for the North West practice.
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