The main tax changes were already known about – the planned increase in the personal allowance and income tax higher rate threshold and the reduction in the rate of corporation tax and reform of corporation tax loss and interest relief rules being the key ones.
The confirmation that the planned reduction in corporation tax rates to 17% in 2020 (19% next April) is to go ahead is good news. Interestingly, there was no mention of the “15% and beyond” spoken of by Theresa May on Monday.
Only time will tell how the North West will benefit from the £1.1bn extra investment in England’s local transport network; the more than £1bn for digital infrastructure; the £2.3bn to help provide 100,000 new homes in high-demand areas; the £1.4bn to deliver 40,000 extra affordable homes; and the £400m for venture capital funds through the British Business Bank to unlock £1bn in finance for growing firms. However, all are potentially positive announcements for the region.
It is to be hoped that a reasonable amount of the new £23bn National Productivity Investment Fund will find its way to the North West to support innovation by North West businesses and improve connectivity.
Given the advance publicity about R&D and innovation, it was a little surprising not to see any changes to R&D tax credits. However, this is already a very generous relief. The issue is more with the low take up of the scheme, rather than the nature of the tax reliefs on offer. It is to be hoped that some of the new funding might be directed at improving accessibility of R&D reliefs.
The announcement of consultation on incorporation, which now seems to be seen as tax avoidance, was a little concerning and could cause uncertainty for many businesses who might be considering incorporation for perfectly legitimate commercial reasons.
There were a few targeted tax avoidance announcements, from a government which has already made significant strides in tackling avoidance and levelling the tax playing field. None of them should have widespread impact.
Overall a relatively low key statement but some optimistic signs of a strong commitment to improving UK productivity and maintaining the UK’s attractiveness as a home for global businesses whilst helping UK businesses to compete in world markets.
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