What you need to know about the Spring Budget 2023
On 15th March, the Chancellor unveiled the 2023 Spring Budget. We’re providing you with an overview of the key outcomes and how your finances will be affected.
Taxation and Pensions
The government will increase tax relief on pensions, with the Lifetime Allowance charge being removed from April 2023, with the Allowance being abolished entirely from April 2024. This means that you will be able to draw any amount from your pensions in your lifetime without paying extra tax. The Annual Allowance, the most you can save in your pension in a tax year, will be raised from £40,000 to £60,000 from April 2023.
Fuel duty will be frozen at its current levels for another 12 months, with the 5p cut remaining in place.
Energy
The government will extend the £2,500 Energy Price Guarantee until June 2023, meaning the average household energy bill will remain unchanged, instead of increasing to £3,000 as originally planned.
Dame Clare Moriarty, Chief Executive of Citizens Advice, said:
“This welcome step will protect millions of people from unaffordable energy bills.
Unfortunately it’s not all good news. The withdrawal of the Energy Bill Support Scheme will still mean the average monthly bill rises by £67 from April.
With millions already unable to afford their bills and energy prices set to remain high in the years ahead, the government must now look at long-term solutions to this problem. Many people, especially those on low incomes, will need ongoing support not only to pay their bills but to make their homes safer and warmer through improved energy efficiency.”
It was also announced that energy charges for prepayment meters will be brought into line with the prices for customers paying by direct debit. Currently, this will only be in effect until the end of the Energy Price Guarantee in June 2023, but the government have said they will look to ensure the PPM premium is ended on a permanent basis.
Benefits
The government set out plans for a reform of disability benefits, looking to abolish the Work Capability Assessment to encourage more to get back to work. The government is exploring a new system that will mean there will be only one health and disability assessment for those claiming Personal Independence Payment (PIP).
The Administrative Earnings Threshold, which determines the level of work coach support that a claimant receives, will be increased from 15 to 18 hours, increasing the number of claimants who face risk of having their benefits cut if they don’t meet work search requirements.
Childcare Reforms
Currently, working parents with three and four-year-olds are eligible for 30 hours of free children care per week during term time. The government has announced that this will be extended to make parents of children aged nine months to three years eligible also. This is set to be rolled out in phases beginning April 2024.
For families on Universal Credit, support for childcare costs will be made available upfront, rather than in-arrears. The Universal Credit childcare cost caps will be increased to £951 for 1 child, and £1,630 for 2 children.
If you need help or advice, get in touch with our team today - call us free on 0808 2787 801, or email us at advice@cawb.org.uk.
