Take a look at our highlights of the 2023 UK budget.

THE UK 2022 BUDGET OVERVIEW

Chancellor of the exchequer Jeremy Hunt has outlined the UK 2023 Budget. Here is what to know.

1 – Income tax

Income tax allowances are staying frozen which will likely mean more people will jump into the higher-rate tax band. This will make it the highest tax rate since the 1960s.

2 – Work incentives and Pension allowances

Getting people back into work is a key point for the chancellor as a result of this pension allowances are getting a shakeup. Total pension allowances are going up to £60k per year (from £40k) with total contribution caps now abolished (Originally it was £1m per person). The Government are doing this in the hope that they can get early retirees back into the workforce by giving better retirement tax benefits. This policy is expected to cost £2bn and only benefit a narrow group of people.  

3 – 30 hours of free childcare for one- and two years olds in England.

UK childcare has skyrocketed in price in recent years making it unfeasible for mothers or fathers to not go back to work. As a result of this, the chancellor has announced that the 30-hours free childcare scheme will be expanded to children over 9 months. The hope is that it gets more people back into the workplace increasing economic activity – a key budget goal. This move will cost an estimated £4bn to the economy. Unfortunately, this isn't getting put into place until 2024.

4 – Energy bill support

The UK government will be extending the energy bill support scheme for a further 3 months. Energy bills are forecast to fall from July and the government has announced further support by capping the energy price guarantee of £2,500 per year for the average household – this gives a saving on an average family of £160. Prepayment premiums will also be scrapped in July saving £45 a year for over four million families. The estimated cost of the energy subsidy was £72-£140bn, however in reality it's looking more like it will cost the government £30bn.

5 – Fuel duty cuts

In March 2022 Fuel duty was cut by 5p. In this budget this will be fixed for a further 12 months as well as freeze fuel duty – Saving £100 a year for the average motorist.

6 – corporation tax rises

Corporation tax is due to increase from 19% to 25% on profits over £250,000. This should help bring in £12bn to the treasury and affect just 10% of businesses. In order to spur investment, however, Mr Hunt will set out plans for 12 new investment zones with a budget of £80m per zone for 5 years costing an average of £192m a year. The investment will be directed at hi-tech industries.

7 – Defence spending

The growing threat of Russia & China has caused the UK government to increase defence spending by £11bn over the next 5 years with the aim to raise this to 2.25% by 2025.

8 - Economic growth

Inflation is also forecast to fall from 10.7% last year to 2.9% by the end of the year. Jeremy Hunt announced that the UK will not enter a technical recession in 2023 and after this year the UK will grow in the years 2024, 2025, 2026, and 2027. With over 1.1m vacancies in the UK to be filled, getting people back into employment is a key task for the UK government.

9 - Other points

• A £63m fund for public leisure centres and pools
• The ISA allowance remains at £20,000.
• £100m to the voluntary sector
• £760m in regeneration projects across the UK
•  R&D credits for small/medium businesses worth £27 for every £100