Businesses across Herefordshire and Worcestershire welcomed the emphasis on business growth in the Chancellors ‘mini-budget’ last Friday morning. The planned rise in corporation tax (19% to 25%) from next April has been scrapped to support business investment. At 19%, it is the lowest in the G20. The reversal of the tax increase will free up much needed funds for businesses to stimulate growth as we head towards the winter period. The Chancellor’s aim to achieve 2.5% of growth for the economy is good news for businesses that face unprecedented times this winter in amongst the ‘cost of doing business crisis’. The energy support announcement from the government on Wednesday also provides much needed support for businesses. The support plan will ease the cost pressures on businesses that have been stacking up in recent months. Under the plan, they will be given support for six months to protect them from soaring bills. Further help will be offered to companies in vulnerable industries after that. However, energy prices are likely to remain high for more than six months and businesses need longer term support if they are to remain competitive.
Furthermore, the government is in talks with 38 local and mayoral combined authority areas in England to set up new investment zones. The zones will offer targeted and time-limited tax cuts for businesses in a bid to increase productivity and create jobs. This is the start of a much needed plan to level up businesses and provide more opportunities for investment. The annual investment allowance for businesses will be permanently set at its highest level of £1 million from April 1 next year. This will give 100% tax relief to businesses on their plant and machinery investments up to the level of £1 million.
This emergency budget is welcome news to businesses in providing the much needed support that is required. However, further support is needed as many businesses enter a traditionally busy trading period producing goods and supplying services. A long-term economic plan needs to be the priority for the Chancellor, to provide a clear pathway for businesses to achieve growth.