From the “Mini- Budget” at the end of September, followed by a number of U-turns and culminating with the Autumn Statement in November, it was a time of constant development and change.
So we could all be forgiven for forgetting that we are now only one month out from the 2023 Spring Budget, announced for 15th March, but what might we expect from Mr Hunt’s second statement as Chancellor?
According to HMRC’s early data, tax receipts in December 2022 were up on those from a year earlier and over 30% higher than December 2019, with the biggest growing earners being Energy Profits Levy, VAT, Corporation Tax and PAYE.
Focusing on the freeze in the personal tax and national insurance contribution thresholds, the Office for Budget Responsibility has forecast that this alone will raise in excess of £20 billion by the end of the 2023/24 tax year.
So are the increased tax receipts, coupled with the decrease in “real wages” and a projected increase in unemployment to 5.25% in the medium term likely to lead to the Government using the Spring Budget to announce lower taxes? Unfortunately, no.
It is instead expected that the measures to be announced will focus on the Government’s priorities of boosting growth, bringing down inflation and reducing national debt. Tax amendments are therefore unlikely to be grabbing the headlines.
However, perhaps Mr Hunt will use this opportunity to point to reduced taxes in the future, with MP’s within his own party encouraging him to “show there is a path” to lower taxes.
Moving away from the Spring Budget and aside from the introduction of the 2022 announcements, what other developments might we expect in the UK tax landscape in 2023?
Potential changes to the Research and Development tax incentives, including a merger of the two current regimes, are currently open for consultation with any significant changes likely to be introduced from April 2024. With a total of £6.6bn in Research and Development tax relief across almost 90,000 claims in 2020/21, this will be an area of interest of many business and tax advisers alike.
Given the ever-developing global tax landscape, it can only be expected that 2023 will also see the UK government focusing on policy changes in regards to international tax. Earlier this month guidance was released by the OECD to assist governments with implementation of the global minimum tax rate (15%) for multinational enterprises, a measure which will be introduced in the UK for accounting periods beginning on or after 31 December 2023.
So while 2023 might not shape up to be the year of new tax announcements, we do still expect plenty of activity as legislation announced in 2022 takes effect.
