Press release

11 Mar 2020 London, GB

EY Budget analysis: Long-term strategy still needed to boost investment in manufacturing

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Adam Holden

EY UK&I Media Relations Senior Manager

Passionate media relations and public relations professional helping to provide insight and clarity to complex business issues. Husband and father to twin boys, and a golden retriever.

Related topics Tax Advanced Manufacturing

Despite some good news for manufacturers in today’s Budget, Mark Minihane, EY Tax Partner and Advanced Manufacturing & Mobility sector leader, comments on how the sheer volume and complexity of tax legislation remains challenging for the sector and that a more holistic approach to business rate reforms is still needed:

“The Conservative manifesto promised to increase the Structures and Buildings Allowance (SBAs) to 3%, and the R&D tax credit regime to 13%. These were delivered today, which is good news for the manufacturing sector. 

“However, although the UK tax regime supports investment at face value through initiatives like R&D tax relief, patent box and capital allowances, our work with advanced manufacturing clients shows that many in the sector find the sheer volume and complexity of tax legislation challenging. Recent changes to the patent box rules and the intricacies of R&D tax credit calculations and capital allowances regime, mean it is not always straightforward to obtain tax relief for investment spend. We need a long-term strategy to tackle the tax base, with more and easier reliefs for genuine business expenses, to help boost investment in manufacturing.

“The Chancellor has responded to calls from a retail sector in distress and brought in further reliefs for business rates. However, we must not to forget that business rate reform is important for manufacturers too, enabling investment in new facilities in the right locations.

“There was also positive news for the automotive sector with fuel duty frozen and further investment in electric charging and road infrastructure (including a £500m pothole fund). However, there was a lack of detail around tax on electric vehicles, the extension of grants for plug-in hybrids, the VAT regime for electric charging away from the home, and electric vehicles used for work but with some personal use. Perhaps a missed opportunity to ensure the uptake of electric vehicles is to be become a reality.”