The Treasury is increasing the Annual Investment Allowance from £200,000 to £1m for two years.
The Budget announcement was met with widespread approval.
John Harcourt, head of Kajima Property, said: “The Chancellor’s decision to increase the UK’s annual investment allowance is a welcome one, and should boost innovation and competitiveness in the UK at a time when the country’s capital allowance regime has been marked the least competitive of all G7 countries.
“Increasing investment in this way could provide a critical opportunity for the UK to become a key player in a sector such as logistics, through investment in automation and robotics.
“The state of the UK’s logistics industry is certainly encouraging, with total annual return for distribution warehouses some 17% in Q4 2017, up from 14.7% in the previous quarter. Uncertainty around trading relationships post-Brexit could however cause operators to lose confidence in future business prospects in the sector, and so if logistics is to continue on this upward trajectory and remain one of the industrial pillars of the British economy it is critical that the UK consolidates its trading relationship with Europe ahead of our departure from the EU.
“This in part can be achieved by creating an attractive environment for UK investors and ensuring continued access to EU markets to match that of Central and Eastern Europe (CEE), which as a region has seen investment of over €13.1bn in 2017 in the region’s logistics sector and has been at the forefront of growth following the expansion of its distribution centres and the eruption of digital trade as a result of the EU’s Digital Single Market Strategy.
“So while increasing the UK’s annual investment allowance is an excellent start, developing a broader strategy to attract investment and spur innovation is key to the UK’s logistics sector enhancing its prospects and helping to drive the growth of the UK economy.”
Toby Ryland, corporate tax partner at H W Fisher & Company, added: “There will be some businesses that would probably prefer the Treasury leave the investment allowance alone. Having said it wouldn’t change two years ago, Chancellor, Philip Hammond, has increased the investment allowance to £1m once again – from £200,000 – for the next two years.
“This may well simply be an attempt to encourage businesses to invest in machinery and other equipment in order boost productivity. But, equally, Brexit uncertainty has been holding back investment and Mr Hammond clearly wants to give it a shot in the arm by raising the tax relief again in case Brexit turns out worse than anticipated. Whether it works is however, is another matter.”