Budget 2023: back to work and boosting the economy

Back to work – or stay in work – to bolster the economy

The 15 March Budget was touted as a ‘back to work Budget’ – ironically, on a day that saw large-scale industrial action by public sector workers across several industries, striking over issues including pay. With many people continuing to struggle with their bills, the announcement that energy support for households will continue for another three months, at its current rate, was made ahead of the Chancellor’s speech.

Also briefed in advance was an increase in help for working parents. The details were left to the very end of Mr Hunt’s speech, that 30 hours of free childcare will now be offered to all children over the age of nine months, which could reduce costs to families by “nearly 60%”.

Again on the theme of work, was the abolition of the lifetime allowance (LTA) for pensions. Currently, the amount that people can accumulate before having to pay extra tax is capped to £1.07m. This change will benefit the very highest earners, of course. But the move could help to retain senior doctors in the NHS who, it has been widely reported for some time now, often find themselves exceeding their LTA before they’re at retirement age. This creates a pension trap and so doctors refuse extra shifts, or retire early, to avoid getting caught in it and losing a substantial amount of income to tax contributions. This trap could be preventing workers returning to employment, too.

Also announced was an increase to the pensions tax-free allowance, from £40,000 to £60,000.

What else could be of interest to those in the dental sector?

The Chancellor said he wanted to create a “pro-business, pro-enterprise” tax regime. In real terms, this meant no change to the planned increase in corporation tax in April, to 25% for companies with taxable profits over £250,000. A company who makes between £50,000 and £250,000 in taxable profits will pay between 19% and 25%.

For businesses who want to buy the latest tech and new equipment, they will be able to lower their taxable profits by deducting the costs of their investments against their tax bill. This isn’t yet a permanent policy however, and only applies for the next three years. Also announced was an apprenticeship scheme aimed at the over 50s who want to enter a new sector, called ‘returnships’. New too was the Chancellor’s allocation of £400m in funding, to increase the availability of support for workers suffering from musculoskeletal and mental health problems.

In summary

If things are less gloomy than they were at the end of last year, there is no sense that the UK economy is out of the woods. Energy bills, and the struggle to pay them, is still affecting millions of people, as is the high cost of living.

Take a sensible, pragmatic approach. Practise energy efficiency, look at the interest rates on your savings and talk to a pension specialist, to discuss whether changes need to be made. Consider your options for your dental indemnity insurance , too, to make sure you are protected – emotionally and financially – in the event of a claim being made against you, as well as making sure your premiums are competitive. At Howden, we offer affordable contract-backed cover, tailored to you for every stage of your career.

If we can look forward to lower inflation by the end of the year, and more people returning to, or staying in the job market, this will help to boost the economy. By Autumn 2023, we should hopefully have more certainty that things are going in a positive direction.

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