Tax breaks ‘needed’ to boost business investment
The Chancellor is being urged to use the forthcoming Budget to introduce tax measures that will encourage business investment.
The EEF, the manufacturers’ group, has said that the Budget needs to prepare the ground for the economy’s eventual recovery from the recession by targeting short-term measures on investment and skills.
Decisions by businesses to delay or reverse expenditure plans could have consequences for the competitiveness of firms once the upturn arrives, the EEF said.
To boost investment now, the EEF has argued the case for a temporary increase in the annual investment allowance from £50,000 to £250,000.
Steve Radley, the EEF’s chief economist, said: “The long term competitiveness of UK manufacturing will depend on companies maintaining investment in leading edge technology and equipment. At a time of increasing international mobility when many companies are looking at where to base their operations this would send a signal that the UK is a good place to invest.”
The EEF also called for measures to protect skilled employees and to support short time working. This would include a more flexible system of per day payments that firms can use for a proportion of their workforce, up to a maximum of 17 weeks.
Additionally, the EEF wants the Chancellor: to restore relief on business rates on empty property; to introduce a temporary extension of a payable R&D tax credit to large businesses engaged in low carbon innovation projects; to offer more help with underwriting trade credit insurance; to postpone increases in indirect taxes such as the climate change levy and landfill tax; and to allow full use of the three year period available for implementing the temporary agency workers directive.
Mr Radley commented: “The Chancellor has made a good start by staggering the increase in business rates companies were facing this year.”
But he added: “The government must back its rhetoric on the need for a more balanced economy with firm actions targeted at supporting companies’ efforts to retain skilled employees and maintain investment.”