There was never going to be any great giveaway in yesterday’s Budget, as Britain’s finances remain relatively precarious. However, it presented a brighter picture of Britain’s economic prospects and contained measures to help get people back to work, as many UK businesses have had difficulty in finding and retaining high-calibre staff, as well as incentives for high-growth businesses with an eye on long-term prosperity.
There was no reversal of the increase in corporation tax this year, which will still rise to 25% from 19%. This was first announced by Rishi Sunak in his 2021 Spring Budget when he was chancellor. The full force of the tax rise will hit businesses with profits of more than £250,000. Companies with profits of between £50,000 and £250,000 will get some relief. And for small businesses making profits of less than £50,000 there will be no change. Businesses will also welcome an extension of the 5p per litre cut in fuel duty which will be extended for another 12 months.
Incentives were announced to make the UK more attractive for high-growth businesses in areas such as medical technology, artificial intelligence and quantum computing. There is a wholesale reform of the UK’s medicine regulatory system to make it nimbler and a further commitment to nuclear energy and carbon capture to help with energy security and environmental goals.
There was also changes to relief on business expensing. To make up for the expiry of the “super deduction tax break” a three-year ‘full expensing’ regime will be in place from 1 April. This allows companies across the UK to write off the full cost of qualifying plant and machinery investment in the year they invest. It can be deducted ‘in full and immediately’ from taxable profits.
Eligible equipment includes but is not limited to:
- Tools such as ladders and drills
- Construction equipment such as bulldozers and excavators
- Machines such as computers and printers
- Vehicles such as tractors
- Lorries and vans
- Office equipment
- Fire alarm systems
Changes in pensions allowance were introduced that could incentivise older workers back into the jobs market. Further assistance with childcare was also announced to get people back into work who are economically inactive due to these crippling costs. This is an important move as many businesses have had difficulty recruiting suitable staff – and the situation has resulted in wage inflation and increased costs for businesses. Currently, working parents with three and four-year-olds are eligible for 30 hours of free childcare per week. The start level has now been reduced to cover children aged 9 months.
The aim of this £4bn policy is to encourage more people back to work to boost economic growth. The Chartered Institute of Personnel Development (CIPD) notes that one million young people have been lost from the labour market over the last 30 years and many organisations have called for a strategy to boost labour market participation across all ages. Help with childcare is key to getting people back into employment – many who want to work find childcare costs mean it is financially viable. Get more people to be economically active is therefore a central policy.
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