ICAEW: Use Budget to encourage business investment

THE ICAEW has urged the government not to cut the annual investment allowance in the Budget later this month in an effort to encourage business investment.

The accountancy institute has asked Chancellor George Osborne to abandon plans to reduce the allowance from £100,000 to 25,000.

The ICAEW said that the government should anyting it can to boost weak business investment, which has grown by 1.1% in the last year, well below the Office of Budget Responsibility’s forecast of over 8%.

Michael Izza, ICAEW chief executive, said: “At a time when businesses should be investing some of their reserves in their economic future, Government is cutting back on the allowances which encourage them to do so. That’s why we think the Chancellor should retain the Annual Investment Allowance and send a signal to businesses that they can feel a bit more confident about the economic outlook.”

The ICAEW also urged the government to “accelerate” improvements in HM Revenue and Customs’ service (HMRC) to business.

Izza said: “Every extra hour that a small business spends dealing with HMRC is an hour that could be invested in growth. Poor levels of service at HMRC create a burden on businesses of all sizes, especially SMEs. Even HMRC has admitted that it does not have enough people with the right skills in the right place. Government must ensure that it gives HMRC the resources it needs to collect tax and support business.”