19 March 2015

BPIF welcomes encouraging announcements in Pre-Election Budget

With just 50 days to go before the General Election, it's perhaps no surprise that yesterday's Budget Statement contains a number of longer-term promises and relatively few immediate benefits for business. That said there are some encouraging announcements in the Chancellor's speech, including a long-overdue review into business rates, a commitment to set the Annual Investment Allowance at an appropriate level at the Autumn Statement, and plans for improving access to R&D tax credits for smaller firms.

Among the measures welcomed by the BPIF are:

• Support for energy intensive industries (paper is among those specifically mentioned in the Chancellor's Statement), with a commitment to bring forward to this autumn part of the Government's planned compensation for energy-intensive plants;
• A commitment to continue cutting the rate of corporation tax, which is already being cut to 20% this April;
• Abolition of National Insurance for employing under 21s from this April, together with its abolition for employing a young apprentice from next April;
• A review of the current system of Business Rates, with the promise of 'far-reaching reform', including a consultation on whether to introduce a Business Rates Relief for local newspapers in England;
• An undertaking to review the Annual Investment Allowance in the Autumn Statement (this was raised to £500K last March but is due to fall back at the end of the year to £25K). The Chancellor said that he was clear that a reduction to £25,000 'would not be remotely acceptable' and that this will therefore 'be set at a much more generous rate';
• Support for the Regions, including new powers for the Mayor of London over skills and planning, Greater Manchester councils being allowed to keep 100% of growth in business rates, and a new rail franchise for the South West of England;
• A freeze on petrol duty, with the fuel duty increase scheduled for September cancelled;
• A boost to consumer spending power through a rise in the tax-free personal allowance to £10,800 next year and £11,000 in 2017-8 and an increase in the threshold at which people start paying 40p tax to £43,300 in 2017-18
• A commitment to implement - following consultation - a package of measures to improve the accessibility of R&D tax credits for smaller businesses, including new guidance aimed at smaller firms and a roadmap for further improvements over the next 2 years.

BPIF CEO Charles Jarrold says: "As might be expected, there are no real give-aways in the Chancellor's Statement this year. And with a General Election looming there is of course considerable uncertainty regarding the future direction of fiscal policy. Nevertheless the focus on financial stability and longer-term economic development taken in this year's Budget is reassuring and hopefully will help businesses plan and invest with a little more confidence".

For more information please contact Amy Hutchinson, Marketing Director, at [email protected].