The Annual Investment Allowance was set to revert to £200,000 in March 2023 but now sits at £1m as part of measures set out today (Sept 23, 2022) in Kwarteng’s Growth Plan.
These include establishing so-called investment zones in England, planning reforms to get infrastructure projects moving more quickly, and the publication of a list of infrastructure projects that will be prioritised for acceleration in sectors including transport, energy, and telecoms.
Speaking in parliament, Kwarteng said: “Our planning system for major infrastructure is too slow and fragmented. The time it takes to get consent for nationally significant projects is getting slower, not quicker, while our international competitors forge ahead. We have to end this. We can announce that in the coming months, we will bring forward a new Bill to unpick the complex patchwork of planning restrictions and EU-derived laws that constrain our growth.”
Kwarteng added that he will ‘liberalise’ planning rules in the new investment zones, which are being established to encourage investment by businesses who will avoid stamp duty on purchases of land and buildings for commercial or new residential development. Further benefits include zero business rates on newly occupied business premises, and no national insurance contribution from employers whose new employees earn up to £50,000.
“That is an unprecedented set of tax incentives for business to invest, to build, and to create jobs right across the country,” said Kwarteng. “We’ll work with the devolved administrations and local partners to make sure Scotland, Wales and Northern Ireland will also benefit, if they are willing to do so.”
Corporation tax, set rise to 25 per cent in April 2023, will remain at 19 per cent and is expected to save businesses £19bn, which Kwarteng said will be reinvested by companies to ‘create jobs, raise wages, or pay the dividends that support our pensions.’ Further plans to boost growth include cancelling the rise in national insurance contributions.
Commenting on today’s announcement in parliament, Graham Harle, CEO of Gleeds, said: “The government has gambled on growth and if this brings confidence to the those operating in our sector then it is good news, but I remain to be convinced with much of the detail yet to be revealed.
“The announcement on investment zones and cuts in stamp duty is to be welcomed. However, many of the planned tax cuts are merely a continuation of current policy or a reversion to where we were last year – the corporation tax rise they have reversed is not even in force yet, and National Insurance only rose in July. So how will more of the same bring about change and boost growth?”
Harle continued: “Energy, materials, and labour are the main challenges for our sector, and as far as those operating in it are concerned this is a sticking plaster budget when the patient needed major surgery."
“Tax cuts are not the only measure that can boost growth and with the weakened state of the pound and the public finances we should be looking at securing some easy wins,” said Seamus Nevin, chief economist at Make UK. “Tax incentives will be less effective whilst industry is dealing with major labour shortages and supply chain disruptions. With a near record ninety three thousand vacancies in the manufacturing sector right now the UK economy is missing out on £7bn per annum in lost output and productivity gains as a result.”
What do you think of the chancellor’s statement in parliament today? Let us know in the Comments below.
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