Spring Statement 2023

16 March 2023

Official sources state that the economy will contract over the next year but, despite this the UK is not technically in recession. It is expected that inflation will drop and this is forecast to fall to 2.9 per cent by the end of 2023, according to the Office for Budget Responsibility.

It was against this back-drop that on 15 March 2023, the Chancellor, Jeremy Hunt, took to the Dispatch Box to deliver his first Spring Statement.

During his speech, the Chancellor outlined his four pillars of growth: enterprise; employment; education; and everywhere. A great deal was covered, so below we outline some of the measures we feel are relevant to operators.

Transport specific points

The government will spend over £5 billion maintaining fuel duty at current levels for the next 12 months. This includes keeping the 5p cut in place.

Vehicle Excise Duty (VED) uprating & Heavy Goods Vehicles (HGV) VED freeze – VED for HGVs will remain frozen for 2023-24. However, The government will uprate VED rates for cars, vans and motorcycles in line with RPI from 1 April 2023.

Following the consultation in 2022 on the HGV Levy, the government will introduce a new reformed HGV levy from August 2023 following the planned end of the current levy suspension period. We understand the reforms to the HGV levy are a further step towards reflecting the environmental performance of the vehicle. Further information can be found here.

The government is to invest a further £200 million in 2023-24 to maintain and improve local roads. Now more commonly known as the ‘potholes fund’.

£8.8 billion will be spent over the next five-year funding period for a second round of the City Region Sustainable Transport Settlements thereby increasing certain devolved powers to improve sustainability.

£58 million will be invested in three levelling up capital projects in the north-west of England. This will include transport connectivity improvements in Rossendale.

We carried out some training on the implications of using red diesel last year as the rules on this are complicated. The Chancellor has made a few changes in this Spring Statement: arboriculture has been added to list of activities for which machines and appliances (other than vehicles) can use rebated fuel; machines or appliances used to generate electricity or provide heating primarily for non-commercial premises to use rebated fuels (even if some electricity or heat is used for commercial premises); and rebated fuel may be allowed in tractors and gear owned by lifeboat charities and used to launch and recover lifeboats.

A welcome change for some trading internationally will be the reduced paperwork for international traders, who will also be given longer to submit customs forms under streamlined rules.

Tax on businesses

There is no change to the corporation tax plans which means that the main rate of corporation tax, paid by businesses on taxable profits over £250,000, is confirmed to increase from 19% to 25%. Companies with profits between £50,000 and £250,000 to pay between 19% and 25%.

The widely discussed capital allowances super-deduction ends on 31 March 2023 and is being replaced by a fully expensing regime for three years. That means that every single pound a company invests in IT equipment, plant or machinery can be deducted in full and immediately from taxable profits.

For smaller businesses, the Annual Investment Allowance is being increased to £1m. What this means is that 99 per cent of all businesses will be able to deduct the full value of all their investment from that year’s taxable profits.

There will be tax breaks and other benefits for 12 new Investment zones which have been described as new ‘Canary Wharfs’.

Business rates relief for retail, hospitality and leisure will be extended to 2023-24. This is 75% relief capped at £110k per business for eligible, occupied properties.

The vehicle charge point scheme will be extended to 31 March 2025.

The Plastic Packaging Tax is set to increase. The tax came into force on 1 April 2022 and is charged at a rate of: £200 per tonne from 1 April 2022 and this will increase to £210.82 per tonne from 1 April 2023. It applies on plastic packaging with less than 30% recycled plastic, manufactured or imported into the UK (including packaging on goods which are imported).

Labour shortage

A number of measures were introduced to help the UK’s labour shortage. This should hopefully have the impact of improving recruitment for businesses.

These include support to assist parents – 30 hours of free childcare for working parents in England expanded to cover one and two-year-olds, to be rolled out in stages from April 2024.

Also a number of measures to encourage the over 50s back into the workplace are to be introduced – “returnerships”, skills boot-camps and sector-based work academies as well as the easing of certain pension rules.

Immigration rules are to be relaxed for five roles in the construction sector (roofers, plumbers, bricklayers, carpenters and plasterers), to ease labour shortages.

The minimum and national wage go up from April 2023, which will be a significant cost increase for businesses employing workers falling into this pay bracket. It is easy for operators to inadvertently fall foul of the rules in this area and care and advice needs to be taken. This is something our employment team can assist with.

The government intends to bring forward a call for evidence to launch in Summer 2023 on informal and ad hoc flexible working to better understand informal agreements on flexible working between employees and employers.

The government will expand the funding for the forthcoming small and medium-sized enterprise subsidy pilot for occupational health services and bring forward two new consultations on how best to increase occupational health across UK employers, covering potential regulatory options and tax incentives.

Operators should be aware that no more paper submissions of P11Ds will be accepted by HMRC from 6 April 2023.

More details about the Spring Statement 2023 can be found here. Please contact jo.dawson-gerrard@backhouses.co.uk if you require any further information.