‘The Chancellor should prioritise measures which encourage companies to invest in their productivity, to support economic recovery from the Covid-19 pandemic.’
This was the view of Tony Medcalf, tax partner at Kendal-based chartered accountants and business advisers MHA Moore and Smalley, as he previewed the upcoming budget on March 3 and the options available to the government.
“If I could ask one thing of the chancellor for the upcoming budget it would be a focus on tax relief schemes which encourage businesses to expand by investing in their own productivity,” he said.
“I believe the government should prioritise putting measures in place to help the UK economy grow out of the current financial situation, which will in turn help generate more tax revenue.”
According to Tony, potential tax relief measures included extensions to capital allowances including the Annual Investment Allowance.
He also highlighted the benefits of giving businesses better access to money which would help them make investments in productivity, including government-backed funding initiatives or better incentivising shareholders to invest money into their business.
“I would also like to see targeted tax relief for business investment into certain areas,” added Tony.
“There is a lot of speculation about how the government will support the creation of a series of freeports across the UK which it is likely to link to the ‘levelling up’ agenda. We may also see further government support for Enterprise Zones, which benefit from enhanced capital allowances.”
He also discussed the possibility for increases to capital gains tax in addition to corporation tax.
“While I believe it is currently more important to introduce measures which prompt business growth, if raising corporation tax is firmly on the government’s agenda it may be sensible to do this now, rather than avoid raising taxes during an election year.
“Fuel duty is often a point of discussion when the budget comes around, and an increase in fuel duty would not be unreasonable this year. With less people currently using their cars, the government may see this as an opportunity to raise rates without much immediate impact.”
