The UK budgets, also known as the Spring or Autumn Statement, is made by the UK’s Chancellor of the Exchequer to the House of Commons; it includes the Government proposals for tax and a report on the nation’s finances — as well as a forecast of the economy created by the Office for Budget Responsibility (OBR).
The Budgets are announced every November and March and allow for an update to be given to the public based on the current state of the country’s economic stability.
Please follow us live as we update this post for every new Budget announcement:
- Spring Budget 2023 And The Housing Market
- Spring Budget 2023 Predictions
- Autumn Statement 2022 Revealed
Subscribe To Our Newsletter
The Spring UK Budget 2023
Jeremy Hunt’s first spring budget has been labelled as a “budget for growth” designed to provide for the health service, pupils and pensioners as he seeks to silence criticism from his party.
Hunt and the OBR have confirmed that the United Kingdom will avoid a recession this year and only contract by 0.2%. Inflation is set to fall to 2.9% from 10.1% by the end of the year. The UK economy is forecast to grow by 1.8% next year and 2.5% the year after.
The OBR’s forecast suggested that the wholesale price of energy had already fallen drastically in recent months — to less than a fifth of its August 2022 peak.
It was expected to fall 60% lower in 2023 than the OBR assumed in its November forecast.
What Was Announced In The Spring Budget?
On March 15 2023, Jeremy Hunt covered plenty of ground in the UK Budget. From utilising 6.6 million economically inactive people and getting them back to work to energy bill supports, public sector pay and plans for business growth.
Getting people back to work
In the United Kingdom, over 6.6 million working-age adults are classed as economically inactive, with the number of people either not working or actively looking for work has jumped by more than half a million in the last three years.
The lack of staff forces employers to pay higher wages and increase prices, although there are currently 1.1 million empty job vacancies.
Universal credit sanctions will be applied more vigorously to hammer down on people who fail to meet work-search requirements or choose not to take up a reasonable job offer.
Of the 6.6 million economically inactive, more than a million have taken early retirement.
The Spring Budget has unveiled new incentives and strategies to encourage and retain older workers in the labour market.
The Government will offer another 8000 places per year to its skill boot camps to help reskill early retirees in construction and technology and provide returnship programmes for those over their 50s.
Hunt announced that he would also increase the annual tax-free allowance from £40,000 to £60,000 and abolish the Pensions Lifetime allowance, previously set at £1.07 million.
In one of the most significant welfare system reforms in a decade, people classified as long-term sick will be able to work without losing their benefits.
Of the 6.6 million economically inactive people, 2.5 million are classified as long-term sick.
The UK Budget has proposed a strategy to reboot the benefits system, allowing long-term sick people to return to work part-time and claim benefits.
The Health and Disability White Paper, published on March 15 2023, outlines plans to scrap the work capability assessment.
There will also be a new voluntary employment scheme for disabled people where the Government will spend up to £4000 per person to aid them in finding appropriate jobs and support them as they do it —- this will fund 50,000 new jobs every year.
Parents At Home
In the UK, there are 1.7 million parents who stay at home to look after their children and are classed as economically inactive. Think tanks have flagged this population segmentation as one of the most easily fixable issues the Government could target.
The Government has proposed that they make changes to childcare support for parents on universal credit to make the payments upfront rather than as a refund. He will also increase the recognition by £951 for one child and £1630 for two children per Month.
Hunt announced a £4 billion expansion of free childcare for one- and two-year-olds in England —- The plan would provide parents extra 30 hours a week. It will also increase funding by £288 million by 2024-25 for the free three-year-old childcare programme.
Energy Bills Support
The Government’s Energy Price Guarantee caps energy for households and is scheduled to rise from £2500 to £3000 on April 1.
But Hunt, to help with the cost of living crisis, has capped this at £2500 for another three months, ending in June — saving families £160 on top of the already existing support, which will cost £3 billion.
Families on prepayment metres will pay the same for energy than those on direct debit.
Households on prepayment metres typically pay higher rates to cover the extra costs for companies managing the metres. Under Mr Hunt’s plans, this premium will be scrapped, saving four million households £45 per year on their bills from July.
If the Government did not extend the Energy Price Guarantee, the typical household’s annual energy bill would leap from £2500 to £3280.
The government support is expected to be lowered to £2,100 in July 2023 — meaning the Government would be spending less on energy support throughout 2023.
Paired with the better-than-expected news on economic growth and tax receipts is likely to free up some fiscal space.
Support for businesses will also become more targeted. But social housing landlords have been calling for more urgency in upgrading the UK’s draughty and ageing housing stock.
Fuel Duty Cuts
The cost of fuel duty is expected to rise by 23% because of RPI inflation in April, adding 7p to the price of a litre of fuel — as well as a temporary 5p fuel cut introduced in March of last year is also expected to expire this Month.
But, Jeremy Hunt has continued cancelling the RPI Fuel Duty increase, which every Chancellor has withdrawn since 2011.
Public Sector Pay
The Government has been under consistent pressure over the past year to commit to a more robust public pay deal to end the flow of strikes.
The existing departmental budgets will allow for a 3.5% public sector pay rise, possibly a 5% increase.
Jeremy Hunt is wary of working in opposition to the Bank of England raising interest rates to tame inflation and has warned that any large pay settlements could fuel dramatic price rises.
Plan For Business Growth
In the UK Budget, twelve investment zones clustered around universities will be announced, each receiving £80 million in funding over five years – including tax reliefs.
Eight places in England have been shortlisted to host investment zones:
- West Midlands.
- Greater Manchester.
- The North East.
- South Yorkshire.
- West Yorkshire.
- East Midlands.
A further four zones are suggested for Scotland, Wales and Northern Ireland.
The UK is currently the best place in Europe to invest, apart from the US and China, which is driven by our tech economy, life sciences, UK’s film industries, and advanced manufacturing industries, and the UK is a world leader in offshore wind.
Regional Investment: Levelling Up
There will be an additional £320 million fund for the Scottish Government, £180 million for the Welsh Government and £130 million for Northern Ireland.
The Government will invest £200 million in local regeneration projects across England, with a further £161 million for mayoral combined authorities and Greater London, while £400 million will be available for new levelling-up partnerships in areas like Cleveland, Redcare and Blackburn.
Jeremy Hunt has also announced a £20 billion investment over the next two decades for carbon capture, which all falls under his plans for becoming net zero.
The Government will back investment projects aiming to store 20-30 million tonnes of CO2 per year by 2030; the Treasury suggests this will create up to 50,000 skilled jobs.
Great British Nuclear has been launched, aiming to reduce the costs of producing power.
Nuclear power is set to be reclassified as environmentally sustainable to give it the same access to investments as renewable energy, and competition for small modular reactors will be funded if it is found to be a viable technology.
Small Business Investments
For small businesses, the Government has increased the annual investment allowance to £1 million — 99% of all companies can deduct the total value of all their investments from that year’s taxable profits.
Any money spent on IT equipment, plant or machinery can be deducted from their taxable profits.
SMEs can claim a credit worth £27 for every £100 if they spend 40% or more of their total expenditure on Research and Development.
Science and Innovation
Hunt announced that there would be a £1 million prize for AI research every year for the next ten years.
Corporation Tax Rise
Business leaders across investment and property industries have warned that higher taxes will hamper growth, but Hunt will forge ahead with the planned rise in corporation tax from April.
First announced by Rishi Sunak in the 2021 Spring Budget, the corporation tax rise will see businesses face a 6% point increase in the corporate tax rate, from 19% to 25%.
The full force of this tax increase will hit firms with profits of more than £250,000.
Businesses with earnings between £50,000-£250,000 will get slight relief. For companies with earnings of less than £50,000 there will be no difference – they will continue to pay corporation tax at 19%.
As corporation tax increases, investment incentives are scheduled to be abolished — corporation tax super-deduction allows businesses to cut their tax bill by 130% of the value of qualifying investment that will end on March 31.
Instead, a proposal to reduce the 130% to 100% cost the Treasury £11 Billion.
Business leaders are warning the tax raid is one of the most significant threats they face this year.
Military UK Budget
Ahead of the spring budget, Ben Wallace argued that the UK budget had to rise by up to £11 billion over the next two years to keep up with inflation, and Hunt has confirmed this.
The Government will add £11 billion to our defence budget over the next five years — nearly 2.25% of GDP by 2025.
It was initially set to rise by just £700 million over the next two years.
The Government will also create a package worth £30 million to increase the Office for Veterans’ Affairs budget, ensuring that ex-servicemen and women are supported.
Spring Budget And The Housing Market
The Spring Budget suggested a massive push to get 6.6 million economically inactive people back into work, which will help the housing market as more people can move out of social housing and onto the open market.
How Could The Spring Budget Have Helped The Housing Market?
Excluding the Energy Bills Support, there is little mention of the housing market and ways to restore stability.
The National Association of Property Buyers (NAPB) have suggested that our Chancellor could be better utilising the Stamp Duty for our housing market by:
- Introducing a Stamp Duty hike for overseas buyers to level the field for local buyers.
- Reduce Stamp Duty in areas of social deprivation to encourage investment.
- Provide pensioners looking to downsize with Stamp Duty relief, encouraging larger homes to become available for families.
- Provide tax incentives for landlords on energy-saving measures.
- Improve measures to make land banking unprofitable, encouraging developers to build on approved sites with hefty taxes on vacant plots.
Also, by easing planning regulations and making it easier for new homes to be built, there would be a significant increase in the support available for first-time buyers and housing supply — boosting the housing market.
Providing tax incentives for builders and property investors would give a further impetus to produce more homes.
The property market also calls for more support for EPC Ratings — The British Property Federation (BPF) warns that we won’t hit the 2050 net zero target if help isn’t provided.
The Government should look to improve the energy efficiency of their homes by instructing a zero VAT rate on maintenance and repairs for properties — incentivising essential upgrades to improve energy efficiency for property owners and landlords.
The British Property Federation suggests that over 50% of properties in England have an EPC rating of D or lower, with only a fifth having plans to improve the energy efficiency of their properties.
Subscribe To Our Newsletter
Spring UK Budget 2023 Predictions
On March 15th 2023, the Chancellor of the Exchequer, Jeremy Hunt, will deliver his first Spring Budget. It is expected that the government will address the next steps in the future of public finances in a way which will not inhibit economic growth.
As of March 1st 2023, the UK housing market seems to be in an unprecedented position as it enters its sixth month-on-month price drop — with Zoopla expecting house prices to fall 5% by the end of the year.
One question many will be asking themselves is, will the Spring Budget help fix the current housing market, or do we need to button down the hatches and prepare ourselves for a bumpy ride?
What Happened In The Last Autumn Budget?
In the last autumn budget, Jeremy Hunt promised a budget of ‘stability, growth and public services’, which came only a few months after the disastrous mini-budget imposed by Liz Truss.
The autumn budget aimed to stabilise the UK’s economy and steer it away from an economic depression. Mr Hunt confirmed that the economy was to shrink over the end of 2022 and into early 2023 and that they had many hurdles to overcome to avoid a recession.
Back in October, when the autumn budget was announced, the UK was facing a cost of living & energy crisis, soaring inflation prices, a reduction in quality of life, and a housing market slowing.
But the autumn budget set out to help stabilise the economy through a series of tax rises, spending cuts and an increased drive for renewable energy.
What Are We Predicting In The Spring Budget?
We predict that the Spring Budget In 2023 is expected to have a positive impact on the UK economy, with measures to reduce inflation, promote economic growth and reduce public debt.
The budget is expected to include tax cuts for businesses, with some tax cuts for those buying and selling property, with incentives to encourage developers and builders to get back into the market.
Additionally, the government is looking to revamp the benefits system so that vulnerable people who return to work part-time can continue claiming some sort of benefits.
We also predict that some form of energy bill support will be implemented — although changes to the Energy Price Guarantee may be made to protect the UK economy from sky-high energy costs.
Overall, the Spring Budget is expected to provide a cushion for many by promoting economic growth and reducing inflationary pressures. But, there are some negative impacts which could affect the overall quality of life of many British citizens.
It is likely that corporation and other business taxes will be increased, which could make the UK significantly less attractive to foreign businesses and investors.
Additionally, there may be further cuts to public spending as the government looks to reduce public debt and repair its economic reputation. The budget could also lead to further increased energy costs.
How Will The Spring Budget Impact The UK Housing Market?
We predict the 2023 Spring Budget to include some form of tax cuts for homeowners, landlords and investors who buy and sell a property. Tax cuts for first-time buyers and those looking to downsize could be beneficial to encouraging more people to enter the housing market.
The Spring Budgets’ effect on the housing market may not be felt immediately, as it will take some time for the changes to take effect, which may not come soon enough for the people who are waiting on more measures to help protect renters from rising rents.
Subscribe To Our Newsletter
Will The Autumn Statement 2022 Help Stabilise The Economy?
The Autumn Budget, announced by Chancellor Jeremy Hunt, promises ‘stability, growth and public services.’ The budget comes only a couple of months after the storm has calmed, post-mini-budget, which riled financial markets and pushed up mortgage pricing. Leaseholders are especially feeling the squeeze as they cannot afford current rent, and rents are expected to rise significantly in the coming months.
The Autumn Statement may help stabilise the UK’s economy as we sit at the feet of a recession; Mr Hunt confirmed in his speech that the economy is set to shrink further next year. But, the United Kingdom currently faces many economic hurdles to navigate a likely recession and avoid a complex financial crisis for leaseholders and freeholders alike.
The cost of living crisis, created by soaring inflation prices (11.1% in October), is making the general public feel highly uneasy, with some being forced to completely change their way of life to put food on the table, let alone pay rent.
With the tax rises of £24 billion and spending cuts of £30 billion, making a total of £54 billion, we can expect to brace for a drastic decrease in our quality of life, with some economists arguing that this £54 billion could fill a so-called ‘black-hole’ of around £55 billion in Britain’s economy. Others suggest that if the government imposes these cuts too quickly and harshly, it could end in a much deeper recession and is already at risk.
The government will use the Autumn Statement to advance the UK’s credibility within the financial markets by demonstrating a future of reduced debts. But, this may run the risk of taking money out of the economy too soon and “causing an even more painful recession” — Dharshini David, Economics Correspondent.
But what are the major announcements made during the Autumn UK budget?
Stamp duty cuts will remain until March 2025, while the government will cut the annual exempt amount for capital gains tax from £12,300 to £6,000 next year and then £3,000 from April 2024. VAT registration will be frozen until March 2024, and windfall tax will be increased by 10% from 1st January 2023 to March 2028. Electric vehicles (EV) will no longer be exempt from Vehicle Excise Duty from April 2025.
Inheritance tax thresholds will be frozen until April 2028, and dividend tax allowance will be cut by £1,000 next year and then £500 from April 2024. There will be no cuts to capital investments over the next two years.
The chancellor has confirmed that the UK will keep the defence UK budget at 2% of GDP to be consistent with our NATO commitments. The Northern Powerhouse rail, East West Rail and HS2 will continue to advance, adding infrastructure to the North.
To decrease demand, rising energy prices and the risk of energy blackmail, there will be a drive to focus more on energy efficiency. The Sizewell C nuclear power plant will go ahead, providing up to seven per cent of the UK’s total electricity. The plan will create over 10,000 jobs and provide six million homes power for 50 years.
To help with the cost of living crisis and 41-year highs, there will be targeted support with the cost of living for people on a low income, disability benefits and pensioners. People on means-tested benefits will be given an additional £900, £300 to pensioner households and £150 to people with disabilities.
The national living wage is also set to rise for people over 23, from £9.50 to £10.42 from April next year. This will increase the salary of around 2 million people. Benefits and pensions will also rise in line with inflation at 10.1%.
In the social rented sector, the government will cap rent rises. Jeremy Hunt has said that the government will limit the rent increases to seven per cent in the next financial year. This should help around four million families.
How Will The Autumn Budget 2022 Impact The Housing Market?
We asked Karl McArdle and Jonny Christie, co-CEOs of The Property Buying Company, how the Autumn UK Budget will affect the housing market over the coming months.
Karl said, “The new Autumn Budget will create stability in the housing market, with higher interest rates counteracting inflation at 11.1%. The housing market has changed so much over the last two years, with much more needed to tackle the double-digit inflation. The central bank lifted its rate by 0.75 percentage points to 3% in early November, adding roughly £3,000 homeowners mortgage bills on average; we need to see some stability for homeowners, which I believe we will continue following the budget announcement.”
“The tax rises will set many people back, and the cost of living crisis will inevitably be even harder, with inflation and energy already being so high. Homeowners on all income levels will feel the squeeze, and we will undoubtedly see people seeking alternative, cheaper ways of living, like downsizing.”
Jonny said, “I think the Autumn Budget will, however, cause problems for second-home owners: we may see fewer people buying second homes due to the tax-free allowance for capital gains being cut, which means that when second-home owners sell, they will face much higher tax bills.”
“Tax thresholds and the energy price guarantee are rising — with the typical household’s gas and electricity rising from £2,500 to £3,000; the autumn budget will squeeze the money people can afford to pay on rent as they pay more tax on their incomes. This, as a result, could create an issue with leaseholders and people paying back their mortgages. People will be forced to look for cheaper alternatives and more cost-effective quality of life.”
If you have any questions about the Autumn statement or want to contact us, we are always happy to help!