Karen Campbell-Williams, Head of Tax at Grant Thornton UK LLP, said:
“Today’s Budget unveiled higher than anticipated spending which the Chancellor aims to fund by a combination of higher taxes and a gamble that the better-than-expected economic growth and productivity predictions will come to pass. Whilst the outcome of his gamble remains to be seen – it was gratifying today to see the Chancellor deliver measures and incentives that we know our clients will welcome.
“The UK mid-market’s top priority, according to our latest Business Outlook Tracker, is measures to improve infrastructure, so there will be a positive reception for the increased investment to improve roads and railways and for the £5.7 billion spend for London-style transport systems across regions.
“Other top priorities for the mid-market were also addressed today, with new incentives for employers to invest in skills development and lifelong learning, along with business rate relief for investment in green technology and property improvements. It was also pleasing to see some help for the sectors most impacted by the pandemic, retail, leisure, and hospitality, which can claim a 50% business rate reduction next year, up to a maximum of £110,000.
“Cloud computing and data investments are high priority areas for investment amongst our clients so the reforms to R&D tax relief will be helpful, though there are likely to be winners and losers here. Whilst many businesses will benefit, some will be adversely impacted by the proposed restrictions on international R&D spend, limiting relief to domestic activities.
“Despite the good news today, carefully managed by the Chancellor with advance briefing of key measures, businesses do have further headwinds to endure. With inflation set to hit 4%, Bank of England rates likely to rise and the 6.6% increase to the National Living Wage, strain on resources is inevitable. This pressure is further compounded by the two significant tax hikes already announced this year, a huge uptick in energy prices and continuing supply chain issues.”