Investment in the UK’s manufacturing sector is set to increase as a result of the Government’s super-deduction tax break, a report has claimed. Research from manufacturers’ organisation Make UK found that 23% of companies plan to raise investment levels because of the super-deduction tax, while 28% are in the process of drawing up investment plans.
“But,” cautioned Afford Bond Director, Paul Edwards: “we noted that of the 149 manufacturing companies questioned, 49% reported that their investment plans would not change and it will remain to be seen how much real impact this has for our client base. And businesses with profits of £50,000 of less, around 70% of actively trading companies, will continue to pay corporation tax at 19%.”
Chancellor Rishi Sunak unveiled the super-deduction in his Budget speech in March 2021, in which the Office for Budget Responsibility said it expects the policy to boost company investment by 10%. With the main rate of UK corporation tax currently at 19%, the 130% super-deduction will cut company tax bills by 25p for £1 they spend on qualifying plant and machinery equipment.
Make UK, said: “The Budget made a clear impact on manufacturers in terms of confidence and they are stepping up their plans to invest in response. For too long the UK’s investment performance has been below par and the [super-deduction] incentive should provide a boost in the short-term at least.”
If you need expert corporation tax advice and guidance, please contact (for Nantwich office) Ben.Edwards@affordbond.com or (for Wilmslow office) Tom.Hornbuckle@affordbond.com for a free one hour consultation on how Afford Bond could help your business. Or complete the Contact Us form on our website.