Friday, December 07, 2012

Anorak Corner

You have to wonder whether anybody in the Treasury or on the front bench has any experience in public relations.

If you type into Google the phrase "Annual Investment allowance increase in Autumn Statement," you will find that only one major news site (the BBC) reported the announcement in this weeks Autumn Statement that the AIA is going to increase tenfold for two years from 1st January.

I find this astonishing, this is the single biggest increase in the availability of capital allowances in this country ever, the increase from £25,000 to £250,000 caught everybody off guard and yet has failed to illicit almost any mainstream reaction. It may only be for two years but this will impact on jobs in the U.K,  as more companies seek to invest in new plant and equipment sooner rather than later.

The AIA has to go up and down on a more or less cyclical basis due to EU legislation, any long term stability of the AIA is seen as a state subsidy, although to be fair to this, and previous, UK governments there are ways around this which also tend to get overlooked as they are buried deep within the pages of the budget statement, but nobody could or would have predicted that we would move from £100,000 down to £50,000 down to £25,000 and then up to £250,000 in five years.

Of course companies should invest in plant and equipment if they need it, we have a saying in the office that the tax tail should never wag the dog but many companies spend tens of thousands of pounds repairing equipment rather than investing in new. It will also mean that companies who were planning on buying new equipment before the New Year will now delay those purchases. On the face of it this only helps the purchaser save tax but with each new purchase a cycle of maintenance and support begins which keeps people in work and also boosts jobs in manufacturing, it actually stimulates investment and gets cash moving rather than simply sitting on company Balance Sheets.

 It's something that ought to have been shouted from the rooftops but instead its coverage seems to have been restricted to trade journals and the BBC.    

6 comments:

Span Ows said...

Indeed, I didn't know and I'm the one who's always screaming about the Coalition's incredibly poor media nous.

Paul said...

This was a piece of good news that got well and truly buried.

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