Spring Budget 2023 predictions: will the tax belt be tightened or loosened?

Chancellor Jeremy Hunt will stand up in the House of Commons on Wednesday 15 March to deliver his first ‘normal’ Spring Budget. So, what can we expect?

We already know from earlier fiscal and budgetary statements that the main Corporation Tax rate on company profits will rise from 19% to 25% on 1 April. There is some speculation that the Chancellor may announce that future rates will be lower in a bid to bring business certainty and encourage investment in the UK.

Although the Treasury saw higher than expected tax receipts in January and despite political pressure to cut taxes, it is likely that such appeals will fall on deaf ears. If there are no headline ‘giveaways’ perhaps we can hope for rationalisation and resolution of tax issues which appear to be holding back growth? Some commentators have suggested that a fresh look at National Insurance Contributions and the interaction between tax and state benefits might lead to a partial resolution of the current labour shortage.

Other watchers have pointed out that changes to the Annual Allowance charge on pension contributions needs to be reduced and the current level of the Lifetime Allowance on such contributions increased. Again, they argue that doing so would make it more attractive for professional and senior management staff to continue working or put in more hours. Given the current state of the economy, the level of inflation, continuing pressures following the pandemic and the continuing war in Ukraine we don’t believe that the Chancellor has any real leeway to loosen the tax belt in this Budget. Sadly, we also think it unlikely that the reduction in Dividend Allowance and the Capital Gains Tax Allowance from April this year – things which may affect many contractors – will be reversed.

Keep an eye open for PayStream’s report and analysis of Budget 2023 on the day.