Making the Best Use of Investment Incentives

Industrial profitability in Britain has suffered badly in recent years—and is still suffering—from the effects of rapid inflation coupled with rigorous price controls. This in turn has led to widespread liquidity problems aggravated by increasing capital needs to meet the ever mounting costs of stock and plant replacement. The survival and growth of firms depend on the ability of management to adapt to the changing business environment. Under today's conditions an acquaintance with the various forms of assistance to industry offered by the Government, and their implications, is essential for those concerned with the financial aspect of management. Intelligently used, these incentives can increase the profitability, after tax, of investment in fixed assets, as well as reinforcing the cash flow needed to finance them. The available fiscal incentives fall into two main classes: those given by way of “capital allowances” on fixed assets in taxing profits; and the range of government grants and other help available to firms operating in, or moving into, the “areas for expansion”.