The Spring Budget announced last week has been touted by the Government as a ‘Budget for growth’, but did the Chancellor produce anything of note for the MI industry to be celebrating?
You’ve already seen the headlines across the media, so let’s get down to brass tacks with five key things most likely to have an impact on retailers and manufacturers in our space, and feedback from MIA partners.
Corporation Tax Increase
- If your taxable profit is above £250,000 you’ll see an increase in Corporation Tax from 19% to 25%. Up to 6% is a significant rise if you are one of our larger members – how will this affect you?
- If your profits sit between £50,000 and £250,000 you will be taxed between 19%-25%. A little more precision could be handy here!
- There’s no change for businesses making less than £50,000 profit, who will continue to pay 19%. Better news for our smaller members.
Capital Allowances Full Expensing
From 1 April 2023 until 31 March 2026 investments made by companies in qualifying plant and machinery will qualify for a 100% first-year allowance for main rate assets. Companies investing in special rate (including long life) assets will also benefit from a 50% first-year allowance in the year of investment. Expenditure on plant or machinery for leasing is excluded.
This is relevant to manufacturers rather than retailers, but how much investment is made in plant and machinery in MI, given that large-scale manufacturing happens abroad?
Investment Zones
The Chancellor announced the creation of 12 new Investment Zones in West Midlands, Manchester, North-East, South Yorkshire, West Yorkshire, East Midlands, Teeside, and Liverpool.
Potentially positive if your area sees some investment – improved transport links, overhauled pedestrian areas? We need to know how Investment Zones are going to be approached before we get too excited.
R&D Tax Credits
Enhanced credits for businesses that have Research & Development as at least 40% of their turnover.
There’s still plenty of R&D happening in the UK – could this be you?
Energy and Fuel
Whilst energy support for domestic customers has been extended for 3 months, which will help staff with their own living costs, no changes were announced to the Energy Bills Discount Scheme for businesses, which will run from 1st April 2023 to 31st March 2024.
The 5p cut to fuel duty on diesel and petrol will now remain in place for another year, until 31st March 2024 – helpful if you undertake deliveries yourself, but will it show in courier prices?
ACS Chief Executive James Lowman condemned the lack of meaningful support: “A Budget focused on growth and investment will come as no comfort to those who will have their entire profit margins wiped out this year by excessive fixed energy contracts,” he said.
Further announcements such as Returnships to encourage over-50s to return to work and the extension of existing childcare support, could bring positive outcomes in terms of staffing and workforce demographic, but there is currently insufficient detail on the former whilst the latter won’t be fully in place until 2025. Things to watch rather than to get excited about.
Reaction to the Budget has been mixed. There are positive announcements in there but some of them are partial row-backs on the Autumn Statement and some need tighter clarification.
Helen Dickinson, Chief Executive of the British Retail Consortium, said:
“In the face of volatile demand caused by high inflation and low consumer confidence, measures to support households with the cost of living, such as the ongoing energy bill support and changes to childcare costs, are welcomed. However, many businesses are weighed down by a myriad of higher costs right through the supply chain. Government must do more to limit one of the biggest drags to retail investment, which is oncoming regulatory burdens heading down the track, or risk a crash in business investment and further inflationary pressures.”
We’re always interested to hear your thoughts, and any you have in regard to the Budget would be very helpful in informing conversations and lobbying we take part in on behalf of MIA members. Drop us an email or give us a call – it’s always great to hear from you.
