From a North East perspective, the overall theme of the Budget is helpful. There are a range of changes which are likely to have a positive impact in the long term, albeit there is nothing which I would class as a ‘game changing’ announcement.
For the North East, the investments in new rolling stock for the Tyne & Wear Metro and the provision of funding to the Tees Development Corporation to facilitate the regeneration of the former SSI site are both welcome – both as individual actions and also as an indication that the Government has actually listened to lobbying from our region. In addition, the “minded to” status of the devolution deal for North of the Tyne should also be welcomed as it should signal the potential for £600m of investment for North of the Tyne over a 30 year period.
From a tax advisers perspective – part of the helpful theme from Budget is what didn’t occur. The mooted reduction of the VAT registration threshold from the current level gives certainty that the threshold will remain at £85,000 for the next two years. This will allow for a large number of businesses in our region to carry out their business activities without unnecessary administration or cost. Equally, the Government have resisted the temptation to change the taxation of the Gig Economy without consultation beforehand. Both of those points will allow a large number of the businesses in our region to operate without further red tape or cost.
In terms of more detailed policy which should assist the North East, I would pick out the following highlights:
- The increase in R&D Expenditure Credit rate for large companies or SME’s carrying out grant funded or subsidised work from 11% to 12% in January 2018, will benefit a broad range of companies in our region who benefit from the Expenditure Credit
- The focus of Enterprise Investment Scheme and Venture Capital Trust investments on more knowledge intensive companies (and a diversion away from investment where the investment is underpinned by property backed assets) will help to encourage investment into our region’s rapidly expanding technology and knowledge based sector.
- The extension of the classes of assets which qualify for Enhanced Capital Allowances, and also the extension of the period in which companies can surrender the tax relief for a cash credit (until 2023), will encourage further investment in green technologies.
- An aspect which is both a benefit and also a challenge for the North East is the increase in the National Living Wage and some of the National Minimum Wage thresholds from April 2018. This is both a benefit for the employees in our region, but also a challenge for employers, who may struggle to pass on the costs to customers.