Manufacturing specialist and Tax Partner, Andrew England, shares his Brighter Thinking predictions for the Spring Budget 2021:
The manufacturing sector needs support in the short term:
- We predict no immediate rush to increase tax rates whilst the full impact on the economy remains unknown. Manufacturing companies need support in the short term to cope with the impact of both the pandemic and Brexit.
How corporation tax could increase
- We do not foresee an immediate increase to corporation tax, as manufacturing businesses need to maintain funds to invest in growth and adapt. We do however anticipate that corporation tax rates will increase over time as the UK corporation tax rate is the lowest in the G20. Businesses should be given sufficient warning to adapt.
Will the chancellor assist the movement of goods?
- Increased funding and investment in training for border controls will help to ease the movement of goods into and out of the EU.
Adaptations to R & D reliefs would be welcomed by the manufacturing sector:
- An increase in the scope of R&D relief would support the investment in automation and digitalisation. This could be combined with a simplification of both the R&D and Patent Box regimes to make them easier to understand.
What support could we see during this budget to increase investment in the sector?
- An extension to the capital allowances annual allowance to support investment or some adaptions to the regime to support the government’s green and carbon neutral agenda.
- A continued and increased focus on grants and financial support for investing in taking on and training younger workers who will have been most affected by the pandemic.
- Banks will be more careful with lending in the short term so encouragement for this or support for Venture Capital schemes to help encourage investment in manufacturing would be welcome.