Pharmacy leaders have cautiously welcomed the tax relief and investment incentives announced in the government's autumn statement, but have warned that it will not solve the sector's financial woes.

Pharmacy experts praised chancellor George Osborne's decision to cut corporation tax rates by 1 percentage point to 21 per cent, freeze fuel duty and increase the annual investment allowance from £25,000 to £250,000.

But lowering the annual pensions contributions limit from £50,000 to £40,000 could spell bad news for independent contractors, they said, as pharmacists prepared for a tough year ahead. The comments came as a C+D reader poll suggested two thirds of readers were expecting their finances to get worse in 2013. Only 18 per cent of the 44 respondents forecast an improvement.

"The higher annual investment allowance will help many contractors, particularly if the new [premises] standards come in" Umesh Modi, Silver Levene

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The cut in corporation tax could not come soon enough, said SG Court pharmacy group general manager Kevin Cottrell. "It doesn't take effect until [April] 2014, which means we're not going to feel it until 2015, so it's helpful but it's still a long way off," he told C+D. He said lowering pensions contributions was short-sighted, but the freeze in fuel duty, which was expected to rise by 3p per litre, could help mitigate the significant fuel surcharges imposed by wholesalers.

And January's 10-fold increase in investment allowances could also prove beneficial, as pharmacists prepare for the introduction of the General Pharmaceutical Council's premises standards next year, he added. "We've just put in two dispensing robots, which were £120,000, so that [increase] would be ideal now," Mr Cottrell said.

Umesh Modi, partner at accountancy firm Silver Levene, branded the increase "very good news" for contractors planning refits.

"The higher annual investment allowance will help many contractors, particularly if the new standards come in," he told C+D. "Where contractors spend large sums of money on new technology, shop fits or improvements to consultation rooms, they will get a full tax break in the year of expenditure as long as they spend up to £250,000."

Lloyds TSB Commercial head of healthcare banking Ian Crompton agreed the measure could prove a trigger to invest for some businesses. But he stressed that the government measures would not solve pharmacy financial constraints alone.

"The cut in corporation tax is a welcome move but it needs to be seen alongside the reducing profits in pharmacy due to higher costs and an ongoing squeeze on incomes and drug reimbursements," Mr Crompton said.