Hammond delivers ‘shot in the arm’ for British businesses

BUSiNESS leaders welcomed a shot in the arm for the British economy last night after Philip hammond unveiled a pro-enterprise Budget.

in the final Budget before Brexit, Philip hammond announced a raft of fresh tax reliefs and spending pledges to help solve the UK’s ongoing productivity problem.

the plan included extra funding for research and development ‘to secure the UK’s position as a world leader in new and emerging technologies such as artificial intelligence, nuclear fusion and quantum computing’.

Seeking to exploit concerns about how the economy would operate under Jeremy corbyn and John McDonnell, the chancellor said: ‘We will always back enterprise. As we finalise our departure from the EU, we must unleash the investment that will drive our future prosperity.

‘So i can announce a package of measures to stimulate business investment and send a message loud and clear to the rest of the world: Britain is open for business.’

Among the policies hammond announced were:

an increase in the annual investment allowance (AiA) from £200,000 to £1m for two years, giving extra tax relief to firms that invest in machinery;

tax breaks to encourage businesses to invest more in factories, offices and other places of work;

£1.6bn for R&D to promote science and tech innovation;

£50m for artificial intelligence fellowships;

a two-year freeze on the VAt threshold.

the measures were welcomed by business.

‘Philip hammond has sent important and positive signals to businesses across the UK, many of whom have been wavering on investment and hiring,’ said Adam Marshall, director general of the British chambers of commerce.

on the increase in the AiA, he added: ‘this will be a huge shot in the arm for businesses across the country, giving many thousands of firms renewed confidence to invest and grow.’

Among the science-friendly measures, the Government will plough £50m in new turing Ai Fellowships to lure artificial intelligence researchers to the UK, £235m to support the development of quantum technologies and increase funding to explore distributed ledger technologies such as blockchain.

Under the industrial Strategy, total R&D investment is due to hit 2.4pc of GDP by 2027.

one of hammond’s headline business policies was a change to the Annual investment Allowance, which carolyn Fairbairn, director general of the confederation of British industry, praised as a bumper package to spur firms to invest more in their factories and machinery.

the allowance will rise from £200,000 to £1m for two years starting in January 2019.

While business groups were mostly supportive of the move, analysts added that firms might choose to delay investment plans to coincide with when the higher rate of relief will come into force.

‘Longer term, this should encourage much more investment, but short-term there may be a lag while businesses wait for January,’ said Pwc real estate tax leader Robert Walker.

Entrepreneurs were directly targeted through an extension to the British Business Bank’s start-up loans programme, which will run until 2021, and amendments to a policy called Entrepreneurs’ Relief - which had been in the line to be scrapped.

they pay a lower rate of tax at 10pc, compared with the standard rate of 20pc on capital gains when they sell off some or all of their business.

hammond has now doubled the minimum qualifying period from 12 months to two years and shareholders will now have to hold a 5pc economic stake in the company to receive the relief.

the chancellor also announced smaller-scale measures, such as £20m of skill-training pilot schemes.

in a Budget that was welcomed for supporting smaller and more risky start-up businesses, hammond said he would help UK pension funds invest in such firms.

Meanwhile the treasury will consult next year on the pension charges cap, which restricts the amount some pension providers can charge in fees.