While Jeremy Hunt’s Budget included a number of big announcements, abolitions, and tax cuts in the broader tax landscape, all of which focused on helping working people keep more of their earnings, changes to taxes that impact the manufacturing sector and companies as a whole remained minimal.
Following the positive news of an expected return to GDP growth in Q1 of 2024, the theme in this Budget for businesses appeared to be “Investment now for longer-term sustainable growth”. The Chancellor seemed very enthused with the investments made in the UK manufacturing sectors and further committed to more funding under their Advanced Manufacturing plan. The further measures announced for businesses also seemed to reflect this objective:
Capital allowances
The Chancellor announced that the permanent full expensing rules, which provide 100% relief in the first year on qualifying plant and machinery expenditure, would be expanded to also include assets that are leased out, although this was caveated to be as soon as economic conditions allow. He has committed to publishing draft legislation for this, shortly.
Fuel duty
There was some good news for manufacturing businesses that run transport fleets as fuel duty is being held at the reduced 5p rate for another 12 months and the planned inflation-linked increases for fuel duty have been cancelled.
VAT registration threshold
For those businesses currently trading below the VAT threshold, the compulsory VAT registration threshold will increase to £90,000 from 1 April 2024. This threshold is based on taxable turnover, which is total sales less exempt supplies, calculated on a 12-month rolling basis.
Carbon border adjustment mechanism
While not specifically mentioned during today’s speech, within the details of the Budget documents is confirmation that the previously announced Carbon Border Adjustment Mechanism applying to the import of relevant goods within the aluminium, cement, ceramics, fertiliser, glass, hydrogen and iron & steel sectors will be introduced from 1 January 2027. The finer details will be subject to a public consultation later in 2024. This aims to provide a level footing on pricing for UK manufacturers investing in de-carbonisation and greener processes.
With no large shocks or changes for companies, this Budget will continue to be business as usual!
To find out more or discuss your individual tax needs, please contact a member of the Tax team on 0333 123 7171.
