Extended tax relief for UK SMEs
UK Chancellor George Osborne released the 2014 budget this week which included a number of actions to encourage investment in the country and keep economic recovery moving forward. In particular small and medium sized businesses were picked out with financial support provided by an extension on tax relief available to companies investing in new plant, machinery, and workplace equipment.
Starting in April, British SMEs will be able to offset up to £500,000 annually against their tax bill, twice as much as the current annual investment allowance, which had a termination date in December.
Over the next two years this new measure is thought to cost the UK Treasury billions of pounds, but will reportedly help 99.8% of businesses that will qualify for the full allowance in full. It is aimed to support and encourage businesses investing in the future by taking down the high tax barriers that prevent businesses flourishing. The Office of Budgetary Responsibility hopes that £1 billion of investments will be seen as a result of the tax relief extension.
In addition to new plant, machinery, and workplace equipment the Budget also addressed research and development, increasing the tax credit available for R&D expenses for loss-making small businesses from 11% to 14.5%.
There are 25 regional “enterprise zones” in the UK that provide business rate discounts and improved capital allowances for new companies. These benefits have also been extended and will now continue providing support for a further three years.
All in all the 2014 UK budget was positive for SMEs and with this renewed government support, British business should be well on its way.
