Budget 2012: Give healthcare businesses incentives to invest
Debbie Wood, partner and head of healthcare services at Moore and Smalley, gives her thoughts on how the Chancellor can use the Budget to encourage healthcare firms to invest.
If the Chancellor is going to help the healthcare sector then some of the current disincentives to investment have to be removed.
The 50p top rate of tax is a particular issue because it has encouraged some healthcare professionals to manage their affairs in such a way that they stay under the threshold for paying the top rate, which hampers business growth and job creation. I don’t believe the Government is in a position to scrap it yet which makes any firm announcements in this Budget unlikely. That said, the Lib Dems appear to be warming to the idea if they can gain a concession from the Tories on an alternative from tax on the wealthy.
Elsewhere, the reduction in the Annual Investment Allowance (AIA) from £100,000 to £25,000, which comes into effect in April, is a blow to the healthcare sector as it discourages GPs and other healthcare businesses from investing in new premises or improving existing buildings.
This is a particular blow for doctors’ surgeries, dental practices and care home businesses that have to ensure buildings are Care Quality Commission compliant. I’d like to see the Chancellor reverse the decision on AIA in this Budget or at least raise the allowance significantly above the £25,000 proposed.
At a time when NHS doctors are being balloted for industrial action over pension provision, I would like to see a clear indication from the Chancellor that higher rate tax relief on pension contributions will be protected at the taxpayer’s highest rate of tax.
I look forward to hearing more substance on how healthcare businesses can use a shared services model for the purposes of reducing their VAT burden, as announced in the Autumn Statement.
I appreciate there is little room for manoeuvre, but I believe some concessions have to be made to the healthcare sector during a period of reform and great uncertainty. The focus has to be on offering incentives for healthcare businesses to invest and create jobs.