The Budget as detailed by George Osborne had some significant changes announced within it in respect of some existing measures and initiatives, but there was little in terms of what you would see as a cohesive or fresh strategy for encouragement of growth by UK manufacturers.
There were a range of grant funding initiatives for science and innovation, including specific grant funding for Low Emission Vehicles, Aerospace R&D funding and also specifically for the North East region, funding for a National Institute for Smart Data Innovation. This new National Institute will help to accelerate the potential opportunities which Smart Data presents for UK industry, the public sector and universities. There was also little which you would regard as significant for the Northern Powerhouse.
The main headline “win” for manufacturers on taxation was the reduction of Corporation Tax to 17% from 2020 (which was previously announced to have been 18%).
However, there were a range of measures which could have an adverse effect on manufacturers (albeit the measures were not specifically aimed at the sector), these included restrictions announced on the tax deductibility of interest for larger corporate groups, tightening of the Patent Box rules in line with proposals which had been announced in the Autumn and further detail on the operation of the Apprenticeship Levy. In addition, there were no additional reliefs for investment in capital expenditure, so the Annual Investment Allowance remains at a relatively low level of £200,000 a year (from 1 January 2016).
In addition, changes to Stamp Duty Land Tax to align the mechanism for banding of SDLT rates with the “graduated” bands used for residential property will mean that acquirers of smaller commercial property will pay less SDLT, but acquirers of larger commercial properties will pay more than they do currently.
So overall, for Manufacturers and the North East generally, we would regard the Budget as being long on content, but short on substance!