The most noticeable aspect of the final Spring Budget (for the foreseeable future) was the brevity and lack of new content!
However, the lack of major reform allows for a period of certainty which is welcome whilst wider economic issues take precedence. Notably, whilst there had been commentary from the Government that the Budget would encourage positivity ahead of Brexit, there was little mention of the impact of Brexit, positive or negative.
Tax measures impacting manufacturing businesses
The tax related measures were mainly limited to raising taxes from the self-employed and owner-managed businesses, whilst softening the impact of previously announced changes to Business Rates and Stamp Duty Land Tax.
For owner-managers and the self-employed there were increases in Class 4 NIC and reductions in the dividend allowance. These changes will be expected to impact on a large number of businesses, sole traders and the self-employed. However, the Chancellor was open about making these changes to raise revenues to pay for increases in Social Care and to help fund the softening of the impact of the Business Rates increases.
The Chancellor has also sought to remove any disparity in tax payable between the employed and the self-employed to ensure that those opting for the ‘Gig economy’ are doing so for commercial rather than tax reasons.
These measures will impact on owners of many businesses involved in the manufacturing sector. For example, owner-managers will face increased tax costs in the form of increased NICs or increased income taxes on extraction of profit. At the same time, it will be less attractive for people to work as “consultants” and there may be more pressure on businesses to hire on full time contracts rather than using workers who operate as self-employed or via personal service companies.
From an administrative perspective, the deferral of entry into Making Tax Digital for businesses below the VAT threshold will be helpful to a large number of the smallest businesses across the UK.
Wider measures impacting manufacturing businesses
Measures to support the Governments Industrial Strategy, including the Industrial Strategy Challenge Fund and the introduction of T-Level technical education routes are also to be welcomed.
There is renewed focus on technical education alongside the Talent Funding programme to fund additional phD places, and the vast majority of these places will be within STEM disciplines.
The Chancellor has continued to express his support for ensuring the UK leads as a centre for innovation by bringing forward simpler administration for the R&D Tax Credits mechanism which provides funding for many companies across the UK.
Overall, whilst there was little of substance, in a period of wider economic uncertainty for once no news is probably good news. However, we feel that there were a number of missed opportunities to encourage accelerated growth in the manufacturing sector.