Following the Chancellor’s Autumn Budget 2018 update, Menzies Manufacturing sector team have reviewed the impact of Philip Hammond’s announcement upon the UK manufacturing sector.
Our manufacturing sector specialist partner at Menzies Caroline Milton discusses the impact of the Budget on the Manufacturing sector.
The Budget contained a number of measures of interest to the manufacturing sector. In particular, the Chancellor has announced a number of new/enhanced tax reliefs, which focus on encouraging investment in plant, machinery, and commercial buildings. Alongside this, there are a couple of areas where taxes are being tightened.
Annual Investment Allowance:
The government has announced a fivefold increase in the Annual Investment Allowance for two years to £1 million in relation to qualifying expenditure incurred from 1 January 2019. Clients should consider the timing of their capital expenditure to maximise this cash flow saving.
In addition, a new capital allowances regime will be introduced for structures and buildings. It will be known as the Structures and Buildings Allowance and will apply to new non-residential structures and buildings. Relief will be provided on eligible construction costs incurred on or after 29 October 2018, at an annual rate of 2% on a straight-line basis. Manufactures who are designing or refurbishing premises should review these rules to identify tax savings
Entrepreneurs’ Relief is being restricted in some circumstances. Shareholders will now need to hold their shares for a total of 24 months in order to be eligible for the relief, and there is a new requirement that the shares must carry capital, as well as voting rights.
Off payroll working:
From 2020 medium and large businesses (with more than 50 employees, or £10m turnover) will need to have processes in place to ensure they are correctly taxing the contractors they engage. Getting this wrong is likely to have large compliance implications, and we recommend reviewing processes in good time.
Find out more about the Menzies Manufacturing business advisory services.
Menzies Autumn Budget 2018 Summary
For more information about Menzies LLP or to talk to us about the impact of the 2018 Autumn Budget on your business and finances, contact your Menzies Relationship Partner.