Spring Budget 2023

In today's Spring Budget, Jeremy Hunt announced to MPs the following measures:

• Further support with energy bills

• Expanded free childcare for children aged nine months to four

• The abolition of the pension lifetime allowance

• Climbing corporation tax

Energy bills support

The Government’s Energy Price Guarantee was previously scheduled to become less generous from April 1. This would have seen the amount that a typical household pays per year rise from £2,500 to £3,000.

But Mr Hunt confirmed that support will now continue at the same level. This will save the average family £160 on their energy bills.

He also confirmed that the so-called "prepayment premium" - where customers who use energy prepayment metres pay more than those on direct debit - would be scrapped from July. 

Childcare

Mr Hunt said current free childcare provision will be expanded and extended to children aged as young as nine months, or when a mother’s maternity leave ends. 

Under the current system, some eligible working parents with three-to-four-year-olds can claim up to 30 hours of free childcare per week for 38 weeks of the year (during school term time) with all entitled to at least 15 hours per week. 

But Mr Hunt said all parents who work at least 16 hours per week will soon be able to claim 30 hours of childcare, for children aged between nine months and four. 

Then in September 2024, parents of children from nine months old will be able to access the same childcare, with all children covered by the policy qualifying for 30 hours a week from September 2025.

• 30 hours of free childcare for every child over the age of 9 months with working parents by September 2025, where eligibility will match the existing 3-4 year-old 30 hours offer.

• This will be introduced in phases, with 15 hours of free childcare for working parents of 2-year-olds coming into effect in April 2024 and 15 hours of free childcare for working parents of 9 months – 3 years old in September 2024.

• Childcare costs of parents moving into work or increasing their hours on Universal Credit paid upfront rather than in arrears, with maximum claim boosted to £951 for one child and £1,630 for two children – an increase of around 50%.

Pension lifetime allowance abolished

He surprised MPs by abolishing the lifetime allowance – the maximum amount that workers can put into their pension pots before they are taxed – instead of simply raising the threshold, as had been predicted. 

The lifetime allowance is currently just over £1m. 

Corporation tax rise

Despite warnings from a chorus of business leaders that higher taxes will hamper growth, Mr Hunt confirmed he is pressing ahead with a rise in corporation tax effect from April.

The change, first announced by then-chancellor Rishi Sunak in the 2021 Spring Budget, will see the tax rate climb from 19pc to 25pc. This is expected to pull in an extra £18bn per year for the Treasury.

The full force of the tax rise will hit businesses with profits of more than £250,000, while those with profits of between £50,000 and £250,000 get marginal relief.

Those with profits of less than £50,000 will see no change – they will continue to pay corporation tax at 19pc.