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Budget: Chancellor ‘cautious’ as he resists corporation tax cut for other business incentives

Speaking about today’s spring budget, Tony Medcalf, tax partner at MHA Moore and Smalley, said:

“After last year’s succession of headline-grabbing budget statements, each with its own overhaul of UK tax policy, many businesses will welcome the more cautious approach of chancellor Jeremy Hunt, even if there is relatively little to excite them.

“The focus on encouraging more people back into the workplace, particularly through pension tax incentives and enhanced childcare, will be welcomed by employers during a period of significant labour market pressures.

“However, as expected, the chancellor resisted calls from within his own party to cancel the increase in corporation tax to 25 per cent, instead opting for a raft of alternative measures to incentivise business growth.

“The replacement of the super deduction which allowed companies to deduct 130 per cent of qualifying investment from profits, with a new 100 per cent investment deduction, is important news for companies investing in growth, especially when twinned with the £1m Annual Investment Allowance and the new £27 tax credit for every £100 spent on research and development for qualifying R&D intensive companies.

“The announcement of 12 new low-tax investment zones will also have significant potential benefits for companies in certain regions and sectors, although it’s important this initiative is rolled out so further areas of the country can benefit as the Levelling Up agenda continues to gather pace.”