Incentives for business growth need to be prioritised in the Spring Budget

The Chancellor should prioritise measures that will provide a platform for business growth

With widescale changes to tax policy unlikely, the Government may focus on giving businesses incentives to invest in the upcoming Spring Budget according to MHA Tax Partner, Tony Medcalf.

Budget announcements in recent years have been dominated by political and global economic pressures including Covid-19 and the impact of the war in Ukraine. The likelihood of a return to a more ‘regular’ budget is welcome and would provide stability to businesses.

After increasing corporation tax from 19 to 25 per cent in his last fiscal announcement, it is important for the Chancellor to look at measures that will provide a platform for business growth.

During his leadership campaign, Rishi Sunk defended the increase in corporation tax and was keen to focus on promoting innovation and research and development, so although there have been calls for the government to announce a reduction in corporation tax, it is unlikely this will change. The Annual Investment Allowance is currently still £1m so although corporation tax is now 25 per cent, when you look at it, this only affects around 30 per cent of UK companies.

Incentives for growth could include:

• Likely incentives for companies include those for investment into research and development, and plant and machinery.

• It is expected that there will be several announcements which will provide tax relief incentives for companies to invest in their productivity and growth.

• The capital allowances super deduction is due to end on March 31 so this could be the focus of an announcement. We could also see further support for freeports and enterprise zones.

• The government is also keen to prompt investment in early-stage businesses and there may be more announced to encourage this. One possible measure could be the extension of the Enterprise Investment Scheme.

Find out more.

For further guidance on any of the tax measures discussed in this article, please contact your usual MHA advisor or Contact Us.

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