Chancellor Jeremy Hunt delivered the Spring Budget on 15 March declaring it to be “A Budget for Growth.” The fiscal update included a range of new measures, starting 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 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 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 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.
The spotlight also 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.
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