How the Spring Budget Effects Your Money

The UK Government has announced a series of changes to its policies and regulations in the 2023 Spring Budget. Among the changes are adjustments to energy pricing and childcare support, pension savings and various tax freezes.

So what does this mean for you and your finances?

Introducing the Spring Budget 2023 – What You Need to Know

One of the significant changes to energy pricing is that the Energy Price Guarantee will remain at £2,500 a year for three months starting April 1, 2023. This is instead of the originally planned 20% hike in pricing. Furthermore, prepayment meter customers will pay no more for energy than those who pay by direct debit starting July 1, 2023.

In terms of childcare support, the UK Government has announced new free childcare hours for younger children in England. Starting April 2024, all households with a two-year-old child living in England will be eligible for 15 hours of free childcare. From September 2025, the free childcare will increase to 30 hours for any child aged nine months to school age. Additionally, upfront funding for childcare costs will be available for those claiming universal credit in England, Scotland, and Wales. Those eligible will receive the first month’s charges paid for them before they start to pay in arrears, with the maximum amount increasing to £951 for one child and £1,630 for two or more children.

The UK Government has also announced changes to pension savings and tax relief, with the annual allowance rising from £40,000 to £60,000 in April 2023, and the lifetime allowance being abolished entirely from April 2024. The money purchase annual allowance will also rise from £4,000 to £10,000 in April 2023, allowing many individuals to contribute more to their private pensions before having to pay tax.

The UK-wide cut to duty on petrol and diesel of 5p a litre has been extended for another 12 months, with the underlying duty being frozen for the 13th year in a row at 57.95p a litre. This is expected to save the average driver £100 over the next year. Foster carers will also receive a tax cut, with qualifying care givers seeing their tax-free allowance rise to £18,140 a year, plus £375 to £450 per person cared for each week, starting from April 2023.

Savings and ISA allowances remain unchanged at £5,000 and £20,000 respectively for adults, and £9,000 for Junior ISAs. The Lifetime ISA limit will remain at £4,000. The Help to Save scheme, which offers a 50% savings boost to low-income earners, has been extended until April 2025.

Alcohol and tobacco duties will increase in line with inflation, while income tax thresholds will be frozen until April 2028. Due to the income tax thresholds being frozen, even those who receive a wage increase below inflation will eventually pay more income tax. Some may be pushed into a higher tax bracket, while others may remain in the same bracket but pay a larger percentage of their income in taxes as their earnings increase.

Overall, the 2023 Spring Budget contains several significant changes and developments in policies and regulations that could benefit many households and individuals in the UK. However, the exact details of how some of the changes will work in practice are yet to be announced, and it remains to be seen how effective some of them may be in meeting the government’s objectives.

If you are concerned about any of these areas or how you may be able to improve your retirement, savings & investment strategies you can book a meeting with one of our independent financial advisers today using the link below.

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Please Note: All information, references and dates included in this article were accurate at the time of publishing.