The Spring Budget included little in the way of tax announcements that directly impact the manufacturing sector, but the focus on productivity and commitments to advanced manufacturing and life sciences are positive statements as the UK seeks to drive its international competitiveness, although the extent to which the non-domicile changes will detract from this when attracting international talent is difficult to assess at this stage.
£4.5bn to be made available for strategic manufacturing sectors
The announcement that £4.5bn will be made available for strategic manufacturing sectors (automotive, aerospace, life sciences and clean energy) over the 5 years to 2030, will be welcomed by the industry, along with the news of AstraZeneca’s £650m UK investment commitment that will create opportunities for those in the supply chain as well as the creation of additional sector jobs.
As a sector that traditionally struggles with labour shortages, it remains to be seen whether the additional 2% NIC cut and changes around child benefit will have the positive effect that the government hopes for.
£50m Apprenticeship Growth Sector Pilot
The lack of skilled labour impacts on productivity and the competitiveness of the UK manufacturing sector, and with this in mind the £50m Apprenticeship Growth Sector pilot for advanced manufacturing is a positive step. However, more focus is needed to drive the link between the education sector and the manufacturing sector to highlight the breadth of opportunity in the sector and to reduce the skills gap, and allow for more collaboration between industry and the sector with an eye on labour challenges and to reduce the skills gap through effective collaboration.
R&D expert advisory panel
The announcements around the creation of an R&D expert advisory panel which will input into HMRC guidance around R&D will be welcomed, as HMRC’s approach in this area over the last 12 months has been questioned both by industry and advisers and more clarification and certainty around qualifying activities is critical to encourage appropriate company investment decisions around R&D.