Budget 2013: Encouragement for manufacturing sector
Before the chancellor rose to his feet at the dispatch box yesterday, my wish list blog had called on him to the ease the burden on manufacturers.
It seems that my wishes have, in part, been answered as I think most manufacturers would regard the 2013 Budget as being another step in the right direction.
The message coming loud and clear from George Osborne was that he wants Britain to be seen by UK plc, and the wider international community, as a place to invest. And despite being a fiscally neutral budget, new measures were announced that will provide encouragement to manufacturing firms.
Breaking down barriers to recruitment
While the cut in corporation tax to 20 per cent from 2015 was widely expected, the chancellor also addressed one of the biggest burdens to recruitment for manufacturing businesses by offering to pay the first £2,000 of an employer’s NICs, regardless of business size.
The corporation tax cut places the UK at the top of the league for mainstream tax rates within the G7 countries and will help manufacturers compete more evenly with established low tax countries.
For new companies, the 2013 Budget confirmed the partial extension of the ‘CGT holiday’ within the Seed Enterprise Investment Scheme, which has been a catalyst for investment start-ups.
Further tax reliefs announced
The Budget also confirmed some minor changes to the final proposed forms of a number of tax reliefs which go live from 1 April 2013 including the ‘Above the Line’ R&D tax relief and the Creative Sector Tax Reliefs.
It’s worth taking another look at the generous range of tax reliefs the UK now has which can substantially reduce the cost of new product development:
– A Patent Box which reduces the tax rate charged on a broad range of income derived from patents to 10 per cent.
– R&D Tax Reliefs on qualifying expenditure incurred for SMEs at 225 per cent and large companies at 130 per cent.
– R&D Tax Credits for both loss making SMEs and also loss making large companies who can now receive a credit based equivalent to 10 per cent of their “above the line” R&D expenditure.
The Budget also confirmed the short term increase in the Annual Investment Allowance to £250,000 for each of the 2013 and 2014 calendar years.
Welcome commitments were also made to increase the access to funding for SMEs through the UK’s new Business Bank and an additional £300m investment funding programme. The Business Bank was one of the things I really wanted to see move forward because, so far, it would be hard to argue that the Funding for Lending scheme has delivered any tangible funding benefits to manufacturers.
Ginni Cooper is head of Moore and Smalley’s manufacturing team