There was some relief with the new scheme announced for full capital expensing. This allows every pound spent by a company on IT equipment, plant or machinery to be deducted from its taxable profits.
The Office for Budget Responsibility predicts that this measure will increase business investment by 3 per cent a year, but we’ll need to see the small print to see how much this benefit, in reality, will offset the increase in corporation tax.
At the very least for advisers, it will bring a long overdue simplification of the current complex rules around capital allowances for companies, while leaving unincorporated businesses such as partnerships still relying on the £1mn annual investment allowance.
All eyes are now on which specific areas will become investment zones in the regions listed by the chancellor.
Likely it will be an area in close proximity to a university, where the local government bodies believe that a high-tech hub could be developed – with a particular focus on creative sector, green industries and advanced manufacturing.
The next step for local councils is to apply to become an investment zone. If successful, they would be allocated funding to attract businesses to the zone.
This can be through incentives such as zero stamp duty land tax, reduced business rates, enhanced capital allowances and employer national insurance contributions relief.
There will also be relaxations for planning applications, potential grants for research and development, and similar support.
These new investment zones – primarily in the Midlands, Yorkshire, Liverpool, Manchester and the Tees Valley – will create new employment opportunities, but residents and business leaders in these areas need to recognise that the process to become an investment zone takes time.
Advisers need to be aware that it could take a while for the benefits to be felt by businesses operating in the area, and for any clients in the South West of England, they should be forgiven for feeling forgotten in this latest Budget.
There was some relief for the hospitality sector after three incredibly tough years with the chancellor’s ‘Brexit pubs guarantee.’
The latest duty rate freeze means that from the first of August the rate on draught products in pubs will be about 11p lower than the applicable rate for a draught product in a supermarket.
The new tax year is around the corner
Last week’s Budget felt relatively light in comparison to recent budget announcements.
The reality is that a lot of the heavy lifting took place in the Autumn Statement.
The priority for advisers should now be preparing for the start of the new tax year where a lot of the changes announced over recent budgets will be coming into effect, including revisions to income tax, dividend and capital gains tax thresholds.
