The UK budget was “a missed opportunity” to encourage manufacturing, according to UK Chemical Industries Association (CIA), but was free from unexpected tax increases.
CIA had hoped the UK budget would implement measures to put the pharma and chemical industries at the forefront of the economic recovery effort but were disappointed in some areas.
The initiatives sought by CIA are intended to ensure “that the UK is, and is seen to be, a good place to do business”, explained Steve Elliott, chief executive of UK CIA. This is particularly important because of the “huge percentage of businesses headquartered overseas”.
Notably, the group is “extremely disappointed” by the lack of measures on energy security and pricing. CIA believes gas storage is important and, although it welcomed the measure, is concerned that increased wind capacity “does very little to increase reliability of electricity supply”.
The budget also included a measure to reduce the Climate Change Levy rebate from 80 per cent to 65 per cent. CIA views this as “an excessive reduction” and is concerned that the action penalises energy saving businesses.
Other areas of the budget were more aligned to CIA’s goals but still fell short in some areas. For instance, the budget doubled the Annual Investment Allowance (AIA), which allows capital expenditure on plants and machinery to be offset against taxable profits, to £100,000 ($150,000).
CIA had hoped the government would increase AIA to £150,000. Following the budget CIA urged the government to be bolder by increasing the rate further and “extending its reach to larger companies”.
Another area where CIA encouraged the government to adopt a bolder approach is the implementation of the Patent Box initiative. This will apply a 10 per cent rate of corporation tax to income from patents from April 2013 but CIA had wanted the initiative to come into force sooner.