Jeremy Hunt aims to spur business investment with ‘full expensing’ tax break
Jeremy Hunt has launched a flurry of tax breaks to encourage investment by businesses after the double blow of microchip designer Arm opting for a New York stock market listing and AstraZeneca deciding to build a new factory in Dublin.
Businesses that invest in IT equipment and machinery will be able to claim back the cost by writing it off against tax on their profits, the chancellor announced in his budget on Wednesday.
Called “full expensing”, it will allow firms to claim up to 100% of the cost of the investment. The step comes amid a long-term slump in British business investment, and criticism from some Conservative MPs that a rise in corporation tax from 19% to 25% in April will damage the economy.
Britain’s biggest drugmaker AstraZeneca announced last month it would build a £320m factory in Dublin, rather than north-west England where it has other sites, because of a “discouraging” tax rate. Earlier this month, the Cambridge-based Arm Holdings, which is owned by Japan’s SoftBank, said it would not pursue a London stock market listing this year, opting instead for a US-only listing that could value it at more than $50bn.
The expensing measure is less generous than the one it replaces, the superdeduction, which allows firms to claim back 130% on investment on areas such as machines for manufacturing, but companies can benefit from it more quickly.
The measure is also due to last only three years, with the possibility of renewal, and is expected to cost the government £10.7bn a year by 2025. Its short-term nature was criticised by campaign groups and policy experts.
“The chancellor made the tough choice to increase corporation tax; for firms this is a bitter pill to swallow. And so we are pleased to see he is providing
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