What the Spring Budget 2023 means for your business
Chancellor Jeremy Hunt recently unveiled the UK Spring Budget 2023. The Budget is aimed at achieving long-term, sustainable economic growth that delivers prosperity for the people of the United Kingdom. Here are the key points on how the budget affects UK businesses.
UK Economy Forecast: Resilient
The latest predictions by the Office for Budget Responsibility (OBR) suggest that the UK economy will avoid a recession in 2023, despite an expected shrink of 0.2%. The economy is predicted to grow from 2024 onwards, with 1.8% growth predicted next year. Furthermore, the record inflation is expected to fall to 2.9% by the end of this year, and the government has committed to meeting the Prime Minister’s target for reducing inflation.
Climate Funding Boost
The Climate Change Agreement (CCA) has been extended until March 2025, and eligible businesses can get up to £60 million of tax relief on energy efficiency measures collectively. This scheme allows eligible businesses to make an agreement to reduce their energy consumption and Scope 1 & Scope 2 emissions in return for a discount on the Climate Change Levy (CCL). The Treasury has also committed £20 billion for carbon capture and storage (CCS) over the next two decades. The fund will be ringfenced to support development for CCS technologies and is expected to deliver 50,000 jobs, attract private sector investment, and capture 20-30 million tonnes of CO2 per annum between now and 2030.
Corporation Tax Increase
From April, corporation tax will increase from 19% to 25% for companies with a profit of more than £250,000, with an expectation to pull in an extra £18 billion a year for the Treasury. Businesses with profits between £50k – £250k will receive marginal relief, and those with profits of less than £50k will continue to pay 19%. Small to medium-sized R&D-intensive businesses will receive a tax boost, as they will be able to claim credit for investments into Research and Development, which will be £27 for every £100 spent if it accounts for 40% or more of their total expenditure.
The Treasury has allocated funding to increase the availability of mental health and musculoskeletal resources, abolished the Pension’s Lifetime Allowance, and increased the pensions annual tax-free allowance from £40,000 to £60,000. The chancellor also announced plans to change disability benefits and introduced funding for a new voluntary employment scheme for disabled people and those with health conditions in England and Wales. Additionally, much emphasis was placed on enhanced childcare support to enable those wanting to work to benefit from subsidised nursery hours and wraparound care for school-aged children.
New Investment Zones Announced
The Chancellor announced 12 new Investment Zones, which are spread across the West Midlands, Greater Manchester, the North East, South Yorkshire, West Yorkshire, East Midlands, Teesside, Liverpool, and four zones across Scotland, Wales, and Northern Ireland. The areas will receive £80 million each over the next five years, with a view to being potential “12 Canary Wharfs.” Furthermore, £400m has been set aside for levelling up projects and £200m towards dealing with potholes. The Chancellor also announced that £10m in grant funding will be made available via the suicide prevention voluntary, community, and social enterprise (VCSE) grant in England to support people experiencing suicidal thoughts or approaching a mental health crisis.
Image Credit © Zara Farrar/HM Treasury
What does this mean for your business?
The Spring Budget 2023 will have a significant impact on businesses in the UK, and the energy industry is no exception. Changing policy and market landscapes can be difficult to navigate, but understanding the impact of these changes on your business is essential.
If you’re a business in the energy sector, there are several areas where you may be impacted:
- The extension of the Climate Change Agreement (CCA) until March 2025 could provide eligible businesses with up to £60m of tax relief on energy efficiency measures collectively. This scheme can enable businesses to reduce their energy consumption and emissions, and in return, receive a discount on the Climate Change Levy (CCL).
- The £20bn commitment from the Treasury for carbon capture and storage (CCS) over the next two decades could provide opportunities for investment and job creation in the energy sector.
- The confirmation that nuclear energy will be classed as “environmentally sustainable” to qualify for the same investment incentives as renewable energy could open up new opportunities for businesses in the nuclear sector.
- The increase in corporation tax from 19% to 25% for companies with a profit of more than £250,000 could have an impact on larger businesses in the energy sector. However, smaller businesses may benefit from the increase in the Annual Investment Allowance to £1m and the introduction of a full capital expensing policy.
Overall, the Spring Budget 2023 provides both challenges and opportunities for businesses in the energy sector. To navigate these changes successfully, it’s essential to work with experts who understand the industry and can help you identify the best strategies for your business. At Northern Gas and Power, we have a team of dedicated energy experts who can help you navigate these changes and identify the best solutions for your business. Get in touch with us today to find out how we can help you.