This ‘back to work budget’ emphasises improving the economy, building the workforce and incentivising people to return to work and for longer. Various measures were introduced supporting people to access the training and education to help turn the UK into a high skills, high wage economy.
From 2025, the government will introduce the Lifelong Loan Entitlement in England for post-18 study, giving people the opportunity to study, retrain and upskill flexibly throughout their working lives. Individuals will be able to access loan funding for full or part-time study, for a variety of courses, from degrees to Higher Technical Qualifications including modular study.
‘Returnerships’ are targeted at the over 50s, which bring together the government’s existing skills programmes, focusing on flexibility and previous experience to reduce training length. Returnerships will promote accelerated apprenticeships, Sector-Based Work Academy Programme placements and Skills Bootcamps to the over 50s supported by £63 million for an additional 8,000 Skills Bootcamps places in 2024-25 in England, and 40,000 new Sector-Based Work Academy Programme placements across 2023-24 and 2024-25 in England and Scotland.
In an extension of the government’s support for Ukrainians fleeing the war who have arrived in the UK under the Ukraine Visa Schemes, the government is providing £11.5 million to offer intensive English language courses and employment support to up to 10,000 individuals.
The government has allocated £100 million funding for the Innovation Accelerators programme to 26 transformative R&D projects. This will accelerate the growth of 3 high-potential innovation clusters and support Levelling Up. This includes the Manchester Turing Innovation Hub led by the University of Manchester, 2 quantum projects in Glasgow led by the University of Glasgow and M-Squared Lasers Limited, and a project to accelerate new health and medical technologies led by the University of Birmingham. A ’Manchester prize’ of £1 million prize will be awarded every year for the next 10 years to researchers that drive progress in critical areas of AI.
Other tax sector highlights include:
- Pensions – lifetime allowance charge removed and annual allowance increased to £60,000 from 6 April 2023. Lifetime allowance abolished from April 2024.
- Measures to help parents return to work such as 30 hours free childcare per week for working parents of 9 month-olds April 2024 (extending the current relief that is available from age 2), increased funding to childcare providers and greater flexibility changing staff-to-child ratios from 1:4 to 1:5 for 2 year-olds in England from September 2023 following parliamentary approval.
- Benefits in kind – To reduce the burden on employers IT systems will be introduced that will enable tax agents to payroll benefits in kind to employers
- Informal flexible working – following the Office of Tax Simplification’s report on cross-border and UK domestic hybrid and remote working, in Summer 2023 the Government will consult on informal and ad hoc flexible working in order to understand arrangements between employees and employers.
- The largest Universities (those with global revenues of 750 million euros) will be required to maintain a master and local transfer pricing file. This will impact the year ended 31 July 2024 onwards.
- Capital allowances – new first-year allowances impacting subsidiary companies for qualifying expenditure incurred on plant and machinery for three years from 1 April 2023. Full expensing available for main rate expenditure (other than cars or plant and machinery for leasing) with a 50 percent allowance for special rate expenditure. This follows the end of the super-deduction relief.
- SME Research and Development (R&D) tax relief – additional R&D credits for loss making SMEs where R&D expenditure is at least 40 percent of total expenditure with effect from 1 April 2023.
- Investment Zones – 12 new Investment Zones to be established across the UK (in England – the Mayoral Combined Authorities of East Midlands, Greater Manchester, Liverpool City Region, the North East, South Yorkshire, Tees Valley, West Midlands and West Yorkshire. In Scotland, Wales and Northern Ireland – four further zones, locations of which TBC). The incentives which could be offered and which may vary from one zone to another correspond to those currently offered to Freeports, which include:
- Full stamp duty land tax relief for commercial property
- Full business rates relief for newly occupied and some other business premises
- Enhanced capital allowances offering a full deduction for certain qualifying expenditure on plant and machinery
- Enhanced structures and buildings allowance, broadly allowing relief for 10 percent of the cost of the relevant structures and buildings each year
- Relief against the cost of Employer’s National Insurance contributions for new employees
While some of these potential reliefs are likely to be less useful for charitable HEIs and FEIs, they may be relevant for their subsidiaries and businesses which the HEIs and FEIs partner with. The relief in respect of National Insurance contributions may be relevant for HEIs and FEIs themselves to the extent that they are in a relevant investment zone.
- Corporate Interest Restriction – Legislation will make a variety of changes, which with certain exceptions, will take effect from 1 April 2023 to reduce administrative burden and remove unfair outcomes.
- Charities – charities located outside of the UK will no longer qualify for UK charitable tax reliefs from April 2024.
- VAT relief for energy saving materials – Currently there are certain VAT reliefs available for the purchase and installation of energy saving materials by individuals and businesses. The Government will be seeking evidence on options to reform the VAT relief for the installation of energy saving materials in the UK. This review will consider the inclusion of additional technologies and the possibility of extending the relief to include buildings used solely for a relevant charitable purpose which could benefit charities supporting the NHS.