Spring Budget 2023

On Wednesday 15^th March 2023, Chancellor Jeremy Hunt delivered a ‘Budget for Growth’ that focused on boosting the economy and encouraging people to return to work.

Here’s what you need to know as an umbrella company contractor:

NIC / National Living Wage / National Minimum Wage

Both the National Living Wage and National Minimum Wage will be increased from the 1^st of April 2023.

These rates will be set at:

• £5.28 an hour for apprentices
• £5.28 an hour for 16-17-year-olds
• £7.49 an hour for 18-20-years-olds
• £10.18 an hour for 21-22-year-olds
• £10.42 an hour for those 23 years old and over

For 2023/24, the government will raise the Class 2 and Class 3 NICs to £3.45 per week and £17.45 respectively.

Personal Allowance

The income tax personal allowance will remain at £12,570 and will be frozen at this figure until April 2028.

Pension Tax

As mentioned previously, the government is hoping to get more people to go back to work and so in an effort to get those over 50 to return, the government is introducing legislation around pensions.

These will come into effect from the 6^th of April 2023 and will include measures such as:

• Increasing the Annual Allowance from £40,000 to £60,000.
• Ensuring nobody will face a Lifetime Allowance charge.
• Changing the taxation of the Lifetime Allowance excess lump sum, serious ill-health lump sum, defined benefits lump sum death benefit, where they are currently subject to a 55% tax charge above the Lifetime Allowance, to taxation at an individual’s marginal rate.

Childcare

Another approach being used to get people to return to work is to help parents with childcare issues by expanding the number of hours, as well as the eligible age range – although it will be a while until this comes into play.

It will also be rolled out in stages, as explained below:

• From April 2024 – all working parents of two-year-olds will be eligible for 15 hours per week.
• From September 2024 – all working parents with children aged nine months up to three years old will be able to access 15 hours per week.
• From September 2025 – all working parents with children aged nine months up to three years old will be able to access 30 hours per week.

To find out more about contracting please contact Jessica on 01206 591 000 or email jessica.attwood@contractorumbrella.com.