Accountancy sector welcomes Spring Budget’s boost for businesses

The accountancy sector has largely welcomed the measures put forward by chancellor Jeremey Hunt in his Spring Budget yesterday, particularly the boost to investment as well as the “calmer approach” of the latest fiscal plan. Chris Sanger, EY’s head of Tax Policy, said that “whether you’re a big business investing and getting full expensing, a small business spending 40% or more on R&D or a company investing in a designated zone, you’ll benefit from the chancellor’s announcements”. Martin Beck, chief economic advisor to the EY ITEM Club, added that the chancellor was able to “present a package of measures which should boost the economy in the short- and longer-term, while still meeting his self-imposed fiscal rules”, and noted that Hunt’s second fiscal event as chancellor “proved less dramatic, but much more upbeat in tone, than its predecessor”. Karen Campbell-Williams, head of Tax at Grant Thornton UK LLP, agreed that the budget “has some sensible and welcome measures to stimulate investment and employment that will be largely welcomed by business”. She said the measures “ticked off some of the top wish list demands; levelling up and skills attraction and development”, and said that “whilst tax certainty wasn’t fully addressed, there were some positive measures to encourage investment in capital expenditure”. She also noted that the chancellor had “gone some way to fill the gap” left by the reduced SME R&D relief announced in the Autumn Statement. Though R&D intensive SMEs will be able to claim a credit worth £27 for every £100 they spend, she warned the “devil is in the detail” however, as the relief is expected to only apply in loss making scenarios where over 40% of expenditure is on R&D. Nonetheless, she concluded: “Overall, in the ‘Budget for Growth’ there were some big announcements that should go a little way towards sugaring the bitter pill of the incoming rise in corporation tax. Mid-market businesses called for measures that would ensure stability and that’s exactly what we got.” Meanwhile, Jon Richardson, head of tax policy, PwC, said businesses will be “relieved” that the chancellor has “acted to soften the blow from the double hit of rising corporation tax rates and the ending of the super deduction”. Combined with increased R&D incentives, he said this leaves the UK in a “competitive position” compared to the other G20 economies, though “somewhere short of the most pro-business tax environment anywhere”. PwC’s R&D tax partner, Chrissie Freear, added that the budget “demonstrated commitment to supporting UK innovation and investment” with its further reforms to R&D tax credits. She said: “While these reforms will predominantly impact SMEs at the larger end of the spectrum, many will welcome the signal that the chancellor has taken on board feedback from the sector following the Autumn Statement.” Elsewhere, Tim Sarson, head of Tax Policy at KPMG in the UK, said the chancellor delivered a budget with “significant fiscal loosening” and managed to address “many of the concerns circulating in the headlines”. However, he warned there were “still some gaps”, and noted whilst a “replacement for the super-deduction will be welcomed, the temporary nature demonstrates a continued lack of long-term strategy which can be damaging to investment”. In addition, he said the “pickings felt lean” in some areas, such as the Investment Zone initiative which “sounded fairly minimal”. However, he concluded that “overall, it reflected a calmer approach following months of political and economic upheaval”. Similarly, Vishal Chopra, Scotland head of tax at KPMG UK, concluded that the budget “reflected a calmer footing when it comes to public finances than last Autumn’s, a situation which has resulted in no significant tax rate cuts or tax rises, but which did include some clear incentives for businesses investing in their futures”.