Member Article

Warning over rising capital allowances

The Government must take steps to protect private sector industries in next week’s budget if the nation is to see real jobs growth shifted from the public sector.

That is the warning to accountants and business advisors, Clive Owen & Co LLP.

The Office for National Statistics revealed recently that Britain’s manufacturing sector is enjoying a stronger than expected start to the year with production rising at its fastest annual rate for 16 years in January.

Booming demand for goods from the US, Europe and China has also driven exports up to an all-time high of £25.1bn.

Nicola Bellerby, a tax partner at Clive Owen & Co LLP in Durham, said: “The Government needs to increase Capital Allowances so that sectors such as manufacturing can continue to thrive.”

“If the planned cuts to capital allowances are allowed to come into force in April 2012 it will put a serious brake on investment by North East manufacturers in new equipment and other assets which they need to grow.

“In turn, if they’re not spending the local economy will also be hit hard.”

Capital allowances mean companies can discount a proportion of the cost of new machinery and equipment against their profits before calculating corporation tax.

At the moment, the incentive applies to the first £100,000 of spend but the figure is due to be reduced to £25,000 in April 2012.

This was posted in Bdaily's Members' News section by Ruth Mitchell .