One of the key points is the two year boost to Annual Investment Allowance, which effectively gives 100% tax relief on capital expenditure. There were also a range of measures announced to stimulate digital and technological investments.
Extensive measures to stimulate residential homebuilding and the conversion of high streets to residential areas could prove a welcome boost to the construction industry. This will generate supply chain demand from the manufacturing sector to service what are increasingly modular and ‘smart’ construction processes.
Investment has continued in initiatives such as the Northern Powerhouse, and the Midlands Engine. Various rail programmes and immediate funding for the Ministry of Defence (MoD), Catapults, local authorities and even schools. This will provide civil engineering and technology supply chain demand for the manufacturing sector.
Concerns that departing from the EU will remove European Investment Funds are eased by £200 million of funding to replace it, via the British Business Bank. International trade is supported by increased funding for UK Export Finance, available to support international trading through UK lending banks.
Smaller manufacturers will welcome exemption from the extension of the off-payroll rules as well as maintenance of the Employment Allowance and the cutting of apprenticeship costs by 50% to just 5%; which seeks to address the continuing skills shortage. This ‘two tier’ approach to business provides a further level of complexity where businesses are at the cusp of becoming ‘larger’.
For larger businesses, the removal of the Employment Allowance, often difficult to administer for groups of companies, won’t cause too much concern. However; the much predicted expansion of the off-payroll rules to the private sector certainly will. We can expect larger manufacturers having to take remedial steps to make themselves compliant by April 2020. Especially as there does not appear to have been any further measures to curtail the benefit of using ‘one man’ service companies to reduce the tax burden in the hands of the contractor.
The freeze on fuel duty is a welcome reassurance to businesses that need power to make their products and power their supply chain.
Is this a budget for manufacturers? Time will tell, but the early signs are promising in what are turbulent times.