A review of the 2023 Budget

15 Mar 2023

By Paul Brown at WR Partners

Paul begins, “Rarely can a Chancellor of the Exchequer speak for so long and, in the end, say so little. For a Budget speech that lasted for around an hour, the meaningful measures it contains to help small and medium-sized entities were very few and far between. Given that the Budget is the tax adviser’s equivalent of Christmas, this year feels like someone has left a nicely wrapped piece of coal under the proverbial tree.

“Mr Hunt focussed on his 4 “Es” – Enterprise, Employment, Education and Everywhere. However, much of the speech focused on everything the government has achieved (with the usual ceremonial opposition bashing) rather than on delivering meaningful measures in these areas. Taking each of these in turn…


“The two tax measures of any substance announced feel like little more than smoke and mirrors. 

 “The first is the ability of companies to expense 100% of their capital expenditure on plant and machinery each year. It sounds great, except the range of assets it applies to is limited to those currently attracting the higher rate of writing down allowances. Most businesses presently get this relief through the annual investment allowance.  

For other plant and machinery, which currently attracts a lower rate of capital allowances, the deduction is limited to 50%. It still seems attractive, except that the AIA gives them a 100% deduction for most businesses. It is telling the press release example focuses on a business spending £10 million on qualifying expenditure – I suspect the proportion of businesses at that sort of level is tiny.  

 “This so-called tax cut is also against the backdrop of a rise in corporation tax for any company earning over £50k in profits – Mr Hunt’s statement that only 10% of businesses will pay the top 25% rate ignores those companies with profits between £50k and £250k which will also see a tax rise come April.

 “The second measure was an “increase” in the R&D credit for small and medium-sized companies whose expenditure on R&D is at least 40% of their total spending. These companies will get an enhanced deduction of 127% – a decrease from the 130% currently available, although admittedly less of a decrease than for other SMEs. When there are already concerns about inflated claims, which is one of the reasons for the upcoming reduction in the credit, I’m not sure encouraging the unscrupulous to increase their claims to exceed the 40% mark is a smart move.

 “At a more niche level, there are some welcome enhancements to the tax credit schemes for the creative industries, which are welcome.


Recognising a large number of vacancies in the workforce, new measures to encourage people back to work were announced; one laudable measure aimed at disabled people is to take away the risk of losing benefits as a result of taking on paid employment. Other measures aim to get the over-50s back into the workforce – again, a laudable aim.  

“One such measure is the annual pension savings allowance increase from £40k to £60k and removing the lifetime allowance cap for tax-free pension savings. However, the cynic in me thinks it seems a bit of a stretch to say that a measure aimed largely at highly paid NHS consultants can be described as encouraging participation of those over the 50s in the workforce.


“The speech’s education part focussed predominantly on childcare system reforms. Additional funding to encourage new joiners to the industry and increases in funding to nurseries providing free childcare have to be welcomed, as are measures that assist those on universal credit returning to work or increasing their hours.  

The landmark (and much-trailed) measure is the extension of the availability of free childcare to those working families with children between 9 months and two years old. However, the rejoicing may need to be put on hold for some due to the phased introduction, which starts with 15 hours free for two-year-olds from April 2024 and the total 30 hours only being available to all by September 2025.  


“I’m not sure how long it took to come up with this “E” as opposed to Levelling Up which is what this was really about. Perhaps the primary measure was the creation of 12 new investment zones in areas such as the West Midlands, Greater Manchester and Liverpool. These “bold, innovative partnerships” will deliver many benefits, including tax breaks. However, it remains to be seen whether this drives the levelling agenda or merely encourages businesses to move away from the less favoured areas into these new zones.

The additional £200 million for pothole repairs was another exciting announcement. However, based on my journey to work as a sample, that funding will work out as something well below £1 per hole.

 Other measures

“Under the cost-of-living agenda, extending the energy price guarantee for another three months is welcome news, as is the alignment of the prices paid by those on pre-payment meters with those who pay by direct debit. Drivers will also welcome the retention of the 5p reduction in fuel duty. However, I suspect many (including, it has to be said, me) had forgotten that this might be coming to an end – or indeed noticed any difference in fuel prices when it was introduced.

 “I did expect a steady as-she-goes Budget after the measures introduced in November. I did not expect the speech to be as uninspiring as it was. The emphasis was on prosperity with a purpose, but it isn’t easy to find many measures that will go far to achieve that. I also still need help reconciling the drive for growth with a very large hike in corporation tax which must have the effect of choking off investment, regardless of the damp squib of the new capital expenditure rules.

 In short, listening to the Budget this time feels like an hour of my life I will never get back.”

Paul Brown is the Tax Partner & Director of Advisory at WR Partners – View Pauls bio here…

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