Budget Highlights for UK Manufacturing

Whilst the recent budget didn’t throw up any significant headline announcements for our Manufacturing Sector, there were various items outlined which should have a positive impact on the sector, including:

Research & Development

The rate of the R&D expenditure credit for non SMEs will be increased from 11% to 12% with effect from 1 January 2018.

Enterprise Investment Scheme

The limit for investment in knowledge intensive EIS companies will increase from £1m to £2m and the annual investment those companies can receive through EIS and the Venture Capital Trust scheme will double. Relief will be restricted, however, to riskier businesses through the application of anti-avoidance measures.

Business rates

The Government will bring forward to 1 April 2018 the planned switch in indexation from RPI to the main measure of inflation (currently CPI) for business rates annual uprating purposes.

Access to finance

The Government will extend the British Business Bank’s Enterprise Finance Guarantee to March 2022 and expand the programme to support up to £500 million of loans per annum.

Corporation tax rates

There were no alterations to CT rates which will remain at 19% and planned to reduce to 17% from April 2020.

Whilst there were extensions of the classes of assets qualifying for Enhanced Capital Allowances, encouraging more green and lower energy consumption investment, more might have been done with the capital allowances regime to make us more competitive with other countries. A lot of people would have also liked to have seen an increase in R&D tax relief for SMEs, not least as they are the companies which make the vast amount of claims for R&D tax relief.

Following the recommendations of the independent Low Pay Commission (LPC), the National Living Wage will increase by 4.4% from £7.50 to £7.83 from April 2018. The Government will also accept all of the LPC’s recommendations for the other National Minimum Wage rates increases to apply from April 2018. Whilst increases are inevitable, Manufacturers will have the challenge of passing this on or making sacrifices elsewhere.