The Spring Budget 2023 Statement built on what the Budget Statement from Autumn 2022 established — focusing on tax and spending to restore economic stability, supporting public services, and laying the groundwork for long-term growth. In the latest announcement, Chancellor Jeremy Hunt promised to deliver on three of the five key priorities Prime Minister Rishi Sunak set out in January. Namely to halve inflation, grow the economy, and decrease debt.
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Here are some highlights from the announcement:
Arguably, one of the most exciting changes is that the cap on how much you can accumulate in pension savings over your lifetime before having to pay extra tax, which currently sits at £1.07m, will be abolished. Additionally, after being frozen for nine years, the tax-free annual allowance for pension pots will rise from £40,000 to £60,000, maximising the opportunity to save for the future.
Energy & Fuel
Government subsidies that cap household energy bill prices at £2,500 a year will be extended for three months, now finishing at the end of June. In a move that will affect 4 million households, there will be £200m dedicated to bringing energy charges for prepayment meters into line with prices for customers paying by direct debit. Additionally, the 5p cut to fuel duty on petrol and diesel that was meant to end in April will be extended for another year.
Good news! According to the Office for Budget Responsibility’s (OBR) latest forecast, we’re on track to meet the PM’s goals. The UK inflation rate will certainly halve, predicted to fall to 2.9% by the end of the year, a drastic drop from the 10.7% rate we saw in the last quarter of 2022. While the country is on the path to avoiding a recession, we will see the economy shrink by .2% this year. The underlying debt forecast is 92.4% GDP, increasing slightly to 93.7% in 2024. Growth is predicted to reach 1.8% this year, rising to 2.5% in 2025 and then falling slightly to 2.1% in 2026. Overall, a good trajectory for the country to find itself in.
To discuss what these changes mean for you, get in touch with your trusted financial adviser. The experts at Dental & Medical Financial Services will be happy to review your financial plan and provide advice to ensure you’re on track to meet your financial goals. Contact us today.