27 Aug 2019
Opportunities in Taxing Times
There is undoubtedly considerable uncertainty within the UK economy as a result of the Brexit deadlock, but is it all doom and gloom?
UK manufacturing is undeniably going through a rough patch amid the political chaos, and businesses in the region are faced with difficult choices over their future trading strategies and investment decisions. Clearly the route taken by any business should be well thought through, but for those who are focusing on new market opportunities or perhaps improving productivity, future changes in corporation tax rates and R&D tax credits may provide the valuable cash resources needed to bring investment plans to fruition.
The reduction in the UK corporation tax rate to 17% from April 2020, coupled with the Annual Investment Allowance increase to £1m, will be key incentives for businesses seeking to make significant investment on modernising equipment or expanding their business premises.
As a firm, we are seeing an increase in manufacturing businesses making R&D claims, although a recent survey undertaken by MHA suggests that the sector is not taking full advantage of the tax relief available with almost 30% of businesses making no claim at all. Despite the economic uncertainty, the manufacturing industry continues to invest in technological innovation and should make use of the valuable tax relief awarded by the R&D tax credit regime.
Naturally any investment decision in the current climate will need to be thoroughly considered but, by taking advantage of these favourable tax incentives now, there may be a significant impact on the ability of manufacturing businesses to compete in a post Brexit environment.