Following the release of the latest UK Manufacturing PMI today (1 June), Ginni Cooper, partner at MHA, believes the government must match last week’s cost of living support package with much-needed tax relief for manufacturers as they face crippling inflation and supply chain delays:
“UK manufacturers require urgent support from the government to restore sector confidence that has deteriorated over recent months as a result of inflationary pressures and supply delays due to the war in Ukraine and Covid-19 lockdowns in China.
“Consumers are now pushing back on successive press hikes, making it very difficult for manufacturers to absorb costs increases on energy and raw materials such as wheat, steel and timber. As businesses grapple with retaining margins, the ongoing shortage of skilled labour that has blighted the sector this year continues to prevent manufacturers from taking on new orders as a means of keeping their heads above water in the short term.
“The Chancellor missed a golden opportunity during last week’s cost of living support package to provide tax relief for businesses and encourage new sector investment. Tax breaks on energy efficiency investments would encourage manufacturers to source alternative means of energy, providing a valuable path to overcoming prohibitive energy costs and improving sustainability.
The government should also reconsider the scheduled reduction in annual invest allowance from £1 million to £200,000 in April 2023 to foster greater investment in qualifying plant and machinery. With this, the end of the super deduction and corporation tax increasing to 25% applying to profits over £250,000 coinciding in April 2023, businesses face a worrisome cliff edge early next year that must be addressed to restore sector confidence in the short-term.”
www.accountancyage.com
