Autumn Budget: ‘UK manufacturers need support as Brexit approaches’
24 Oct 2018
Caroline Milton, manufacturing head at accountancy firm Menzies LLP, looks ahead to the Budget on Monday 29 October and specifically what measures the Chancellor can deliver which would benefit the manufacturing sector as a whole.
Positive news about falls in public sector borrowing means the Chancellor has an opportunity at least to deliver some good news for UK manufacturers, whilst reinforcing that Britain is open for business.
Whilst there may be some additional tax takes or compliance requirements, there is potential for the Government to build on recent announcements about the end of austerity and deliver a Budget to support UK manufacturers as Brexit approaches.
Announcements made by the Chancellor could focus on several areas, including:
The UK’s manufacturing businesses often acquire and create intangible assets used in the manufacturing process. These could take the form of intellectual property rights, such as patents, design rights and trademarks or more general know-how about processes and manufacturing methods.
Following a consultation into the UK’s Intangible Fixed Assets regime earlier this year, the time is ripe for the announcement of a more generous – and less complicated than the current system – tax treatment for intangible assets.
Apprentices Announcements made during conference season of a funding injection of £125 million into jobs and apprenticeships in the UK has been met positively by the manufacturing sector. Now is the time to show that words have translated into actions, rather than political discourse.
Changes affecting how businesses receive relief for hiring apprentices would certainly be well-received; potentially allowing manufacturers to reinvest funds from the Apprenticeship Levy across the supply chain, rather than just within their business. Allowing funds to be used in this way could assist with the development of stronger supply chain relationships.
Off-payroll working IR35 and off-payroll workers are hot topics currently, with some speculation recently that the Government is planning to extend the regulations to the private sector. Because of this, using contractors could become more onerous for businesses in the future and carry increased risk. This could be a particular pain point for the automotive sector, which regularly engages corporate contractors.
Whilst the start date for the new regime remains uncertain, the Chancellor may use the Budget as an opportunity to provide more clarity. At present, the likely dates are 6 April 2019 or 6 April 2020. The later date would give businesses more time to gear up. However, the earlier one is still an option for a Chancellor that might be seeking to increase the tax take in some areas in order to generate more funding for the NHS.
Making tax digital
The implementation of Making Tax Digital is expected to continue. The majority of VAT-registered manufacturers will be affected from April 2019 and it’s important that businesses recognise this as an opportunity to access real-time information and monitor key performance indicators. Corporation tax
It’s likely that the lowering of Corporation Tax to 17% will go ahead in 2020, as is currently planned. However, there are concerns that this may be accompanied by other base-broadening measures, such as the loss of interest restrictions which have been introduced in recent years.
Achieving stability and consistency should be the Chancellor’s goal in what is shaping up to be an important Budget for manufacturers. The fiscal framework that is established now must ensure the UK remains competitive in the face of Brexit.
Caroline Milton is a partner and manufacturing sector specialist at Menzies LLP