"Hunt expands free childcare and scraps limit on tax-free pension savings" was the initial headline reaction of the BBC news service, and to be honest it is tempting to leave it at that. In a budget rich on warm words but light on significant policy announcements, the Chancellor made the most of modestly good news from the economic forecasters. Headlines from the OBR were:
- The economy is forecast to grow by 1.8% in 2024 and 2.5% in 2025
- Inflation is forecast to fall to 2.9% by the end of this year
Changes to the rules around pensions contributions were trailed this morning. The increase in the tax-free yearly allowance from £40k to £60k went ahead as expected, after having been frozen for 9 years, but the increase in lifetime allowance for pensions savings was replaced by an announcement that the limit would be abolished entirely.
The speech was hung around the 4 Es of Enterprise, Employment, Education and Everywhere, but some of the most newsworthy changes were on another E: Energy. The cap on household energy bills of £2,500/year will be extended for 3 months until the end of June. Pre-payment meters – a cause of much disquiet as they typically impact adversely the rates paid by the less well off – will have their charges brought into line with the rates paid by those on direct debit.
On fuel taxes, the 5p cut introduced by Rishi Sunak when he was Chancellor stays in place for another year.
Alcohol duty will rise in line with inflation from 1st August this year, when the new duty system is coming into effect, but a reduction in duty on draft beer will see it 11p lower a pint than would otherwise have been the case.
On corporation tax, the increase from 19% to 25% will go ahead but companies will be able to deduct investment in tech and new machinery to reduce taxable profits.
The other big announcement featured the headline figure of 30 hours of free childcare for everyone with a child over 9 months old, although the detail of this left it being introduced over time with the number of hours increasing each year and the minimum age reducing, so it will not be until September 2025 that we see the full policy in action, if the government are by then still in power.
So that's it. You may ask how it took over an hour to say that, but as they say, "I couldn't possibly comment!"
We’ll be going into more detail on the Budget and what it means for you, your clients and your organisation with regularly published updates, available as part of the accountingcpd licence for you and for your team.
Alan Nelson is an author for accountingcpd. To see his courses, click here.
You need to sign in or register before you can add a contribution.