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‘Superdeduction’ tax provides significant boost to manufacturing confidence

30 April, 2021

As we approach the onset of summer and the dust of the Budget has settled down and the country begins the gruel route out of lockdown, how does the outlook appear for manufacturers? Stephen Phipson, Make UK CEO, reports for Smart Machines & Factories.

The big announcement from the Budget was the ‘superdeduction’ tax which our evidence shows has provided a significant boost to confidence especially among mid-size and larger companies, with the planned rise in Corporation Tax doing little on the surface to impact significantly on investment domestically or, from overseas.

According to the latest Make UK survey almost a quarter of companies said they plan to increase investment as a direct response to the ‘superdeduction’ tax with more than a quarter saying they will bring forward investment plans in response. Just under half said there would be no change to their investment plans or their plans were too rigid to change. The incentive was also seen by almost a third of companies as the Budget measure which had the biggest impact followed by the decision to extend the furlough scheme and boost to R&D.

However, we still believe given the UK's longstanding poor performance on investment there remains a need for a longer-term, broad-ranging industrial strategy that will genuinely put manufacturing at the heart of plans to recover from the pandemic. This should encompass a partnership between Government, Industry and the UK's world class science base to boost the UK’s innovation and investment performance.

Looking further ahead, conditions for the sector are continuing to improve for the sector overall with a range of business surveys showing the sector is outperforming other parts of the economy which are still subject to restrictions. As we move into the sector half of the year the key is to ensure that the rebound in manufacturing performance continues and the Government commits to its objective of bringing forward policies that will begin to level up regional performance through a mix of public and private investment.

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