Some of road transport’s biggest companies could face a hit to their cash flow after the chancellor signalled he was bringing forward corporation tax deadlines forward yesterday.
BNP Paribas Leasing Solutions said plans announced in yesterday’s Emergency Budget by George Osborne to bring forward corporation tax deadlines for businesses with profits of more than £20 million – thirteen of MT’s Top 100 companies - will have a substantial impact on their cash flow.
The government estimates that bringing forward the payments will cost businesses a total of £7.6bn in the two years 2017 to 2019.
From April 2017 these companies will be required to make corporation tax payments in the third, sixth, ninth and twelfth months of their accounting period.
Currently, corporation tax payments are not due until the seventh month of a company’s accounting period.
Tristan Watkins, UK country manager for BNP Paribas Leasing Solutions, said: “Larger companies are going to have to look at new ways to manage their cash flow without sacrificing planned investment, especially in the transitional period.”
“Having access to leasing in order to fund new investments will be crucial, and we will be there to support businesses through this process.”
Corporation tax itself is to be reduced further, to 19% in 2017 and 18% in 2020 - something the government claimed would benefit one million businesses.
Annual Investment Allowance
At the other end of the scale, BNP Paribas Leasing Solutions has also urged SMEs to make use of their Annual Investment Allowance (AIA) now, after the chancellor signalled he’d be effectively halving it.
The capital allowance can be used by SMEs to buy equipment, machinery and business vehicles including vans and trucks. It is currently set at a temporary £500,000 but in the Budget chancellor George Osborne announced that a new permanent level of £200,000 would now be introduced.
BNP Paribas Leasing Solutions suggested businesses would therefore need to place major orders for investments in capital equipment in the next couple of weeks. Eligibility for the current AIA of £500,000 depends on equipment being on site and ready for use by 31 December.
Tristan Watkins, UK country manager for BNP Paribas Leasing Solutions, said: “While the chancellor has clearly listened to the warnings that the original plan of cutting the AIA to £25,000 was not wise, there will still be some disappointment that the new level has not been set higher.
“Businesses will have to act fast if they want to take advantage of the current year’s allowances.”
Yesterday’s Emergency Budget brought relief in the shape of no new fuel duty increase but disappointment after the RHA’s push for a HGV driver training fund came to nothing.
