With widescale changes to tax policy unlikely, the government may focus on giving businesses incentives to invest at next month’s budget, a leading Lancashire tax expert has claimed.
Tony Medcalf, tax partner at Preston-headquartered accountancy and business advisory firm MHA Moore and Smalley, said budget announcements in recent years had been dominated by political and global economic pressures including Covid-19 and the impact of the war in Ukraine.
While he welcomed the likelihood of a return to a more ‘regular’ budget, which would provide stability to businesses, he claimed it was important for chancellor Jeremy Hunt to look at measures to provide a platform for business growth, after increasing corporation tax from 19 to 25 per cent in his last fiscal announcement.
Tony discussed the announcements he believed were most likely, including incentives for companies to invest in research and development and plant and machinery.
He said: “There have been calls for the government to announce a reduction in corporation tax but I do not think we will see that. During his leadership campaign, Rishi Sunk defended the increase in corporation tax and was keen to focus on promoting innovation and research and development.
“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.
“I think there are going to be a lot of announcements which 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 I think more will be announced to encourage this. One possible measure could be the extension of the Enterprise Investment Scheme.”