Cost of living support
The Chancellor began his speech with measures directed at help with energy costs. The Energy Price Guarantee (EPG), which limits the amount that energy suppliers can charge consumers, will be maintained at £2,500 for a further 3 months: it will increase to £3,000 on 1 July 2023 rather than 1 April. The EPG restricts the standard tariff that can be charged so that the amount payable by an ‘average household’ should not exceed the stated figure; the actual energy bills of individual households will vary.
The Chancellor also confirmed, as expected, that the 5p cut in fuel duty will be retained for the next year, and the rate will be frozen for the second year running. This will save the average motorist £200 over the period when compared with the increases in duty that were originally planned.
The Chancellor announced significant increases in free childcare in order to encourage more people to enter or re-enter the workforce. However, the new provision will not be available immediately. From April 2024, working parents of 2 year-olds will be able to access 15 hours of free childcare per week, benefiting parents of up to 285,000 children. This will be extended to working parents of 9 month to 2 year-olds from September 2024, benefiting parents of up to 640,000 children. From September 2025, all eligible working parents of children aged 9 months up to 3 years will be able to access 30 free hours per week. These provisions will apply for 38 weeks a year.
The Chancellor announced that the government would establish 12 new Investment Zones throughout the UK to provide a catalyst for high-potential knowledge intensive growth clusters. The government has invited local partners in eight areas in England to begin discussions on establishing Investment Zones, and is working closely with the devolved administrations to establish how the Zones will be delivered in Scotland, Wales and Northern Ireland. Further details of the five-year tax package and grant funding available to businesses in Zones will be announced in due course.
The government will restrict charitable tax reliefs to UK charities and Community Amateur Sports Clubs only from April 2023. This is intended to ‘focus UK taxpayer money on UK charities’. EU and European Economic Area charities that HMRC has accepted before 15 March 2023 as qualifying for charity tax reliefs will continue to enjoy those reliefs for a transitional period until April 2024.
Making Tax Digital
HMRC confirmed in December that Making Tax Digital for Income Tax Self-Assessment (MTD for ITSA) will be delayed by a further two years, until April 2026. The new legislation will come into effect in April 2026 for businesses, self-employed individuals and landlords with gross income over £50,000, and in April 2027 for those earning over £30,000.