The Budget 2013 and Its Impact on Humber’s Renewables Industry

KEY announcements in the Budget, delivered by Chancellor George Osborne, could be positive for the Humber’s renewables industry, according to an accountant working in the sector.

Looking at the impact the Budget will have on the region’s renewables industry, Andrew Manderfield, partner at Streets Chartered Accountant, said there were two areas in particular that were to be welcomed by green energy companies:

Streets Chartered Accountants is a multi-regional top 40 UK accountancy practice that works across various sectors, including energy.

The firm has offices in key renewable energy-related locations, including Hull, Lincoln and Cambridge, and also has wide experience in advising businesses involved with research and development.

Mr Manderfield said: “There were two key announcements in the Budget 2013 that should have a positive impact on the Humber’s renewables industry.

“Firstly, there is the announcement that the rate of corporation tax will not only be reduced to 20 per cent in April 2015 but, as important, going forward there will be only one rate of corporation tax.

“Up until now there have been two key rates depending on whether your business was classed as large or small based on its level of taxable profits, with a marginal rate in between.

“The Budget announcement should go some way towards simplifying the legislation aimed at countering the manipulation of profits around these rates.

“The new single lower rate will no doubt make the UK, in terms of corporation tax rates, a very attractive destination for overseas businesses looking to locate here, not least those in the renewables industry, considering the renewables hot spot of the Humber estuary. Perhaps we might see more of the likes of Siemens looking to locate here?

“For new starts and growing businesses, already operating in the area, the lowering of the rate of corporation tax makes the argument to convert your sole trade or partnership business to a limited liability company even more compelling.

“For the many new enterprises that have established in recent years in the sector, it may be time for them to consider which is the best vehicle through which to trade going forward.

“The second announcement which is likely to boost the local renewables industry is that around the changes to research and development (R&D) tax credits for large companies.

“As a sector that is increasingly at the forefront of technological development and reliant on innovation any financial support in the shape of enhanced tax reliefs must be welcome news.

“In particular, the Chancellor George Osborne announced in the Budget plans to make repayable tax credits (currently only enjoyed by small and medium sized entities) available to large companies.

 “The Government will introduce a new ‘above the line’ (ATL) credit equal to 10 per cent of qualifying R&D costs incurred by large companies post-April 2013.

“The ATL credit is designed to make R&D relief more visible to those making investment decisions and provide greater cash flow support to companies with no corporation tax liability.

“Certainly for many small, truly innovative enterprises, R&D tax credits, whilst not widely understood, can provide a significant boost to venture funding and overall business success.

“The extension of the benefits of the scheme to larger enterprises surely will provide a boost to the renewables industry and to establish the Humber estuary as a key location for the industry as a whole.”

[mappress]
Press Release, March 21, 2013