THERE can be few complaints from business about what George Osborne served up in the 2014 Budget. Along with savers, business was the chief beneficiary with support for manufacturers, exporters and investment.
Most eye-catching was the announcement that the Alternative Investment Allowance, a 100% tax allowance for investment and capital expenditure, has been doubled to £500,000 and extended to the end of 2015. At a cost of £2bn to government coffers, that represents a sizeable tax break to business. At the same the Seed Enterprise Investment Scheme, launched in 2012, is being made permanent.
There was also a big focus on manufacturers and exporters. For exporters, the amount of government finance available to support overseas sales has been doubled, to £3bn, while interest rates levied on the credit has been cut by a third. Manufacturers received a further fillip with the announcement of a £7bn package to cut energy bills.
The Carbon Price Support rate is being capped at £18 per ton of CO2 from 2016/17 for the rest of the decade, which Osborne estimated would save a mid-sized manufacturer almost £50,000 on their annual energy bill, while the existing compensation scheme for energy intensive industries is being extended for a further four years to 2019/20. Additionally, new compensation worth almost £1bn to protect energy intensive manufacturers from the rising costs of the Renewable Obligation and the Feed-In Tariffs will be introduced.
“A resilient economy is a more balanced economy with more exports, more building, more investment – and more manufacturing too,” Osborne said in his address to the House of Commons. “I want the message to go out that we are backing our exporters – so that wherever you are around the world you can’t fail to see: Made In Britian.”
Among the other new measures unveiled by the chancellor, business rate discounts and enhanced capital allowances in enterprise zones are to be extended for three years; the R&D tax credit for loss-making small businesses will rise to 14.5% from 11% while the European Commission approved the extension of the government’s previously announced film tax credit.
Though there were no landmark announcements for business – cuts to corporation tax and changes to Controlled Foreign Company rules having been previously introduced – much of this year’s Budget implemented reforms “around the margins”, said Kevin Hindley, managing director at Alvarez & Marsal Taxand UK.
“There was nothing fundamental in terms of changing the landscape of business taxation. However, in truth, these measures will be broadly welcomed by business,” Hindley said.
Michael Izza, chief executive of ICAEW, said the Budget “sends a strong message to business that they need to accelerate their plans to grow exports and increase investing.”
“For it to act as the incentive the chancellor wants, these measures need to be coupled with increasing access to advice and support for businesses who want to export and invest,” Izza said.