The Annual Investment Allowance had been increased in recent years to encourage business investment. Having risen to a temporary level of £500,000, it seemed likely that the allowance would to revert to its starting point of £25,000 at the beginning of 2016. However, in the Summer Budget George Osborne announced that the allowance would be set at a permanent level of £200,000 from January.
Ian Isaac, head of Lombard, said: "Given the response to our survey, it is clear that manufacturers value the tax incentive provided by the Annual Investment Allowance. We know that manufacturers are very aware of the link between investment and improved productivity, and as a result manufacturing has been a sector that has made the most of the higher allowance.
"While many will be disappointed that the permanent level was not set higher, we envisage that those who have high value capital investment plans will bring forward these plans in order to make the most of the higher allowance during the remaining five months that it is available. Going forward, having a permanent allowance level will at least enable manufacturers to plan their investment activity."
The Lombard Attitudes to Business Investment Survey also indicated that manufacturers are looking to the government to promote more uptake of new technology, with 86% stating that Whitehall should do more to support businesses to encourage ongoing investment in technology.
Isaac added: "Our survey provides further evidence that manufacturers recognise the essential role that technology plays in engineering improvements in productivity and increasingly business competition.
"Lombard will therefore continue to work with manufacturers and their trade bodies, including the EEF to fulfil our role as a funding provider in allowing businesses to continually review and update their equipment in line with new innovation and technological enhancements."
The survey also showed that 70% of manufacturers have used asset finance in the past. Among those manufacturers that haven't used it, nearly half (48%) said they would do so if they had more information about how it could benefit their business.
Isaac concluded: "While manufacturers tend to know more than those in other sectors when it comes to funding options, there is still a significant number who would like to find out what options like asset finance are all about. It's therefore up to us to educate manufacturers about the benefits of using this means of funding."
