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An overview with Celeste Garib

Spring Budget 2023 Overview

Celeste Garib, 15 March 2023

Today's Budget contained a number of announcements which could have an impact on your finances. Here we provide a rundown of the ‘winners’ and ‘losers’ of this Budget.


Over-50s returning to work

In his speech, the chancellor said that “older people are the most skilled and experienced people we have”. So, he announced steps to make it easier for those over 50 to work for longer.

Firstly, the government announced an enhancement to the “midlife MOT” strategy – offering reviews to help individuals take stock of their finances and wellbeing to prepare for a more secure retirement.

Hunt also introduced a new kind of apprenticeship – called a “returnership” – aimed at over-50s who want to return to work.

The chancellor also announced some significant pension reforms aimed at encouraging more over-50s to remain in work, or to return to work. This brings us to…

Pension savers

The Lifetime Allowance (LTA) restricts the amount of tax-efficient pension savings an individual can accrue in their lifetime.

Having reached a peak in 2012, the LTA has been frozen at £1,073,100 since 2020.

To encourage people to remain in work, rather than retiring to avoid punitive tax charges for exceeding the lifetime limit, Hunt made the unexpected decision to abolish the LTA. The government will remove the LTA tax charge from April 2023, and completely abolish it in a future Finance Bill.

In addition, the Annual Allowance that restricts the maximum amount that you can save tax-efficiently in any one year will also rise, from £40,000 to £60,000 in April 2023. You will continue to be able to carry forward unused Annual Allowances from the three previous tax years.

This is excellent news, as the previous ceiling of £1,073,100 was not enough for many people, given that people are living longer and likely to have long term care expenses. However, it is likely that some people will feel very hard done-by, as they may have been forced to cut short their careers to avoid going over the LTA limit.

Even so, whilst there is no limit on the LTA, the maximum amount that you can withdraw from your pension tax-free is being limited to £268,275 (which is 25% of the current LTA limit).

We believe that this change to pension allowances is a wake-up call to all earners, not just the super-rich, to ensure that they are putting a minimum of 10% of their salary into their pensions.

Finally, many high earners are also affected by the Tapered Annual Allowance. The chancellor announced that the minimum Tapered Annual Allowance will increase from £4,000 to £10,000 from 6 April 2023. So, people who are in retirement and drawing from their pensions are now being encouraged to put money back into their pensions. This offers tax relief and is an effective way of passing on wealth to the next generation.

In addition, the adjusted income threshold for the Tapered Annual Allowance will also be increased from £240,000 to £260,000 from the same date.

These are major steps that will allow pension savers to accumulate significantly more tax-efficient pension savings over their lifetime, and reduce some tax disincentives to work. In addition, once an individual flexibly accesses their defined contribution pension savings, the total tax-relieved pension savings they can make each year is restricted to the level of the Money Purchase Annual Allowance (MPAA).

To support those who have left the labour market to return and supplement their income, or build up their retirement savings, the government will also increase the MPAA to £10,000 from April 2023.

Parents with young children

In what is likely to be a key battleground ahead of the next election, the chancellor announced an expansion of free childcare.

In an attempt to boost growth and get more people into work, working families will have access to 30 hours of free childcare each week for children aged between nine months and four years.

This is alongside boosts to subsidised childcare for parents on Universal Credit including upfront support. Support will be phased in until every single eligible working parent of an under-five gets this support by September 2025.

However, no changes have been made to Child Benefit which can be subject to a tax charge if one parent’s income is over £50,000. It may be possible for an earner to reduce their income by paying more into their pension and therefore retain their Child Benefit entitlement. If you are affected by this, it is worth exploring this option with your adviser.

Households with high energy bills

Back in November, Hunt announced that the government’s Energy Price Guarantee – an initiative of the Truss administration – would continue in its present guise until April 2023.

Under the guarantee, for six months from 1 October 2022, the average household has been paying energy bills equivalent to around £2,500 a year.

In April 2023, the guarantee was set to rise to £3,000, however the chancellor announced that the Energy Price Guarantee would be extended by a further three months.

This is designed to keep bills at £2,500 on average and the Treasury says this will save the average family £160 on top of the energy support measures already announced.


With inflation remaining high, the chancellor argued that now is not the right time to uprate fuel duty with inflation, or increase the duty.

So, he announced a one-year extension of the 5p cut in fuel duty, saving the average driver £100 on top of the £100 saved so far since last year’s cut.

In addition, the chancellor announced an increase of £200 million to the “potholes fund”, taking the annual amount allocated to £700 million. The increase is expected to fix the equivalent of up to 4 million additional potholes across the country.


Hunt talked about the risk to swimming pools and other community facilities of rising costs. In response, he announced a £63 million fund to keep public leisure centres and pools afloat.


In a populist measure, Hunt announced his “Brexit pubs guarantee”. While duty rates of all alcoholic products produced in, or imported into, the UK will increase in line with inflation, from 1 August, draught relief in pubs will be up to 11p lower than the relief for supermarkets. This is in addition to changes already due to come into effect in August.

As Hunt said: “British ale is warm but the duty on a pint is frozen.”


Businesses with larger profits

Back in 2021, when he was chancellor of the Exchequer, Rishi Sunak announced that Corporation Tax would rise in April 2023 for businesses making more than £250,000 in profits.

The Budget confirmed that this increase will proceed in April as planned – with around 10% of companies paying the top rate.

Companies with profits of less than £50,000 will continue to pay Corporation Tax at 19%. This is good news for small business owners.

However, businesses will be able to offset 100% of their UK investment in IT equipment, plant, and machinery against profits to reduce their tax bills. This is an effective cut to Corporation Tax of £9 billion a year, and the government aim to make the scheme permanent when it is responsible to do so.

For self-employed people, it is worth bearing in mind that operating via a company creates the opportunity to draw income in the form of dividends, which is free of NI, and then pay tax on profits at the corporation tax rate, instead of a personal tax rate, which could be up to 45%.


In his November statement, the chancellor reduced the Income Tax additional rate threshold from £150,000 to £125,140, increasing taxes for those on high incomes.

He also announced that Income tax, National Insurance, and Inheritance Tax (IHT) thresholds would be maintained at their current levels for a further five years, to April 2028.

Over the next five years, this is likely to see many people pay more Income Tax, as rising earnings push them into a higher tax bracket.

In addition, as house prices and asset values rise, it is likely that more and more estates will face an IHT bill over the next five years. It is worth reviewing your pensions as they are an effective way of passing on wealth without incurring IHT.


While it may now be possible to contribute more to your pension tax-efficiently, the subscription limits for tax-efficient ISAs were frozen at:

• £20,000 for an adult ISA

• £9,000 for a Junior ISA

It is good news that ISA limits have not been reduced or capped, as they are the simplest way to save and invest without paying tax.


In the Budget document, the Treasury confirmed that duty rates on all tobacco products will increase by RPI plus 2% from 6 pm on Budget day.

The rate on hand-rolling tobacco will increase by RPI plus 6% and the minimum excise tax will increase by RPI plus 3% this year.

People needing long-term care

There was nothing in the Budget regarding support on paying for care fees. This is disappointing as it is a growing issue which affects a growing number of people, and long-term care needs to be planned for in advance.

Get in touch

If you have any questions about whether you are a winner or a loser from the spring Budget, and how it will affect you and your finances, please get in touch.

All information is from the Spring Budget document and the government’s Spring Budget bulletin. The content of this Spring Budget summary is published by Flying Colours Advice Limited and is intended for general information purposes only. The content should not be relied upon in its entirety and shall not be deemed to be or constitute advice.

\ While we believe this interpretation to be correct, it cannot be guaranteed, and we cannot accept any responsibility for any action taken or refrained from being taken as a result of the information contained within this summary. Please obtain professional advice before entering into or altering any new arrangement.



Categories: Financial Lifestyle Planning

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