KPMG’s UK Head of Consumer Markets Linda Ellett comments on the announcements from the Chancellor’s Budget from a consumer markets perspective.
Commenting on the announcements from the Chancellor’s Budget from a consumer markets perspective, Linda Ellett, KPMG’s UK Head of Consumer Markets, said:
“Outside of COVID-19, much of the focus during this week’s Budget was understandably on business rates, while movement on research and development allowances weren’t really given the attention they deserve. Being one of the largest operational expenses for consumer-facing businesses, business rates are undoubtedly a real headache for those with a large physical presence, but it doesn’t look like that headache will fade any time soon. Indeed, the relief that was announced majored only on real estate with a rateable value below £51,000, so attention would be better placed on the tools consumer businesses actually have at their disposal - at least until a fundamental review of business rates finally occurs.
“Focussing on the positives, both the drinks business and consumers will have raised a glass to the prospect of the alcohol duty freeze. And beyond that merry addition, the Scottish whisky industry in particular will also have welcomed the Chancellor’s £10m innovation fund to help distilleries go green by moving them away from oil and gas use, leveraging their own biomass fuel instead.
“The support for greener businesses is a central theme that stretches far beyond distilleries. All consumer businesses need to think very carefully about their green credentials in the coming years. The pressure may seem like it is coming from all angles – whether it’s Brexit uncertainty or the impact of COVID-19 – but consumers are demanding more environmentally friendly and sustainable manufacturing. Indeed, our own research found that two-thirds of Brit say they care more about the environmental impact of their consumption today, compared to five years ago.
“Looking at research and development more broadly, there was upward movement in the research and development expenditure credit from 12% to 13%. Essentially, businesses making use of this receive about £10 cash back on every £100 they spend on research and development, and from April that will increase to around £10.50. It might seem like a small uptick but it’s a welcome move that holds the potential to encourage more innovation.
“We all know that innovation has become sorely sought after by consumer businesses looking to weather the testing climate, so making the most of this allowance could help ensure a company’s offering – both product and service – remain firmly on the radar of increasingly fickle consumers. There was also mentioned of consultation around whether this could extend to the costs of data and cloud computing, which are of growing importance to businesses looking to get a deeper understanding of their customers.”
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