Fresh produce firms seeking to invest in a tax-efficient way have been boosted by George Osborne using his 2014 Budget to double the Annual Investment Allowance (AIA) to £500,000.
The AIA, which allows businesses to invest in new plant and machinery for maximum tax benefits, and has now been extended to 2015, was initially cut from £100,000 to £25,000 by the coalition, before being pushed back up to £250,000 in 2012.
In response to this decision, a Tweet from the official NFU account said: ‘Good to hear Gov is doubling AIA, but it needs to be kept consistent permanently, not to just 2015.’
The chancellor also revealed during his Budget speech to Parliament today (19 March) that the UK government is to double the funding for export finance to £3 billion in a bid to boost UK trade.
Osborne said: “Our exports have grown each year and the OBR forecasts rising export growth in future. But we start from a low base, and we’ve many lost years to catch up.
“For decades, the British government has been the last port of call, when we should be backing British businesses wanting to sell abroad.”
Aligned to this was the unveiling of plans for regional airports to get £20 million towards the cost of new routes.
British Retail Consortium chair Helen Dickinson, said: “British retailers in e-commerce already export more than £4 billion of goods to customers overseas. There is scope to increase that amount to around £28 billion per year by 2020 if the conditions are right. Thus, the chancellor’s measures to extend the role for UKTI will be warmly welcomed by our members who are keenly promoting their businesses abroad.”
Osborne also unveiled a £7 billion relief package for businesses that will reduce energy bills over the next few years.
The chancellor said Whitehall will cap the carbon price support rate at £18 per tonne of carbon dioxide (CO2) from 2016 to 2017 for the rest of the decade.
He added that the government will extend the compensation scheme for energy intensive firms for another four years.
Chief executive of the Forum of Private Business, Phil Orford, said:“On export, the chancellor has thrown his weight behind getting more businesses exporting. Our membership is confident about growth, but much of that growth is UK-based so we needed to see such a commitment, though we will continue to work with the Treasury and others to develop even healthier export subsidies for business.
“Overall this was a budget that offers some help to all levels of business, with perhaps a slight focus on the mid-size energy intensive and manufacturing businesses, rather than the very small ones. However, it does help to tackle the cost of energy and makes good on the commitment trailed before the Budget to support those that look to invest, either in the UK – with a more extensive Annual Investment Allowance – or abroad, with a £3 billion export support budget.”
The Budget included a freeze on fuel duty, and saw Osborne announce £140 million of funding to repair and maintain flood defences.
He also confirmed that a garden city with 15,000 homes will be built in Ebbsfleet - chosen because of its “fantastic” infrastructure, and because it is in the Tory heartland of the south-east of England, where Osborne argued pressure on housing has been high.
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