Finance
Sector Focus Brexit impacts spending habits
Almost a quarter of people in the West Midlands have tightened their belts and changed their spending habits due to Brexit uncertainty, according to research from KPMG. The research by the professional
services firm found that 24 per cent of people in the region had changed their spending habits, compared to 28 per cent in the East Midlands. Overseas trips have been hit
hard, as over one in ten (11 per cent) avoiding booking a holiday because of Brexit. Nationally, men are much more cautious about their money in light of Brexit than women, with over a third (35 per cent) of men changing their money management and only one in four (25 per cent) women doing the same. Zoe Young, managing director of Financial Services Consulting at KPMG in the Midlands, said: “It is clear that people locally are uncertain about the future, spending and investing less while saving more. “However, whilst people work to
protect their finances from Brexit uncertainties, interest rates remain
Zoe Young: Brexit means belt tightening
stubbornly low so savings aren’t really working for people. “The business world has been cautious about investing for growth since the referendum and that’s clearly playing through into the real economy and people’s financial confidence.” Simon Purkess, partner and head
of Retail and Consumer Markets at KPMG in the Midlands, said: “These figures bring to light just how much Brexit has impacted people’s everyday lives. “We can see this in the way that
people are delaying significant purchases such as foreign holidays. “When looking at travel and
holidays in particular, fears around flight paths and border controls are clearly playing out in people’s actions, and of course the fall in the value of sterling won’t have done much to entice people overseas either. “For consumer businesses, the
focus has to be on remaining agile so as to ride this wave of uncertainty. “Those that can achieve this may
even benefit from pent up demand when clarity finally does return to both businesses and consumers.”
“Capital allowances should be a primary factor in assessing the feasibility of any commercial construction project, often it is
A company who have ventured out to make an impact in their local town by building three high specification two storey offices have managed to secure huge ongoing saving for their business through the work of Elect.
Elect are a chartered surveying practice who specialise in Capital Allowances, a tax relief against capital expenditure on commercial property.
On a development of £3.75m, Elect have managed to identify over £750,000 of equipment qualifying for capital allowances which reduced the corporation tax liability by over £145,000.
This hugely underused tax incentive have worked wonders for this company who have managed to re-invest this saving against their tax, to the next project and assist in the overall cashflow of the business.
cashflow that kills a project, and by reducing a tax liability, it can only improve cashflow. It also has the added bonus of proving to lenders that you are mitigating a risk that could affect repayment of a loan.”
(Iain Stamp, Elect)
HM Revenue and Customs are further highlighting their intent for businesses to reinvest in themselves by introducing a new form of capital allowances, called Structures and Buildings Allowance (SBA) and increasing the Annual Investment Allowance (AIA) to £1m from £200,000.
What this means to all businesses is that the government is wanting you to invest in your own capital projects and whether that is a refurbishment, extension or new build as an owner occupier, landlord or tenant, there is a tax incentive for you to do so.
The incentive extends to all industries except residential, and the amount of relief is typically between 10 and 25% of the capital spend. Therefore, if a project is on the horizon or currently being undertaken, take a moment to consider capital allowances and how this may help the business.
November 2019 CHAMBERLINK 69
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