Chancellor George Osborne announced a number of business tax reforms in a Budget speech yesterday (16 March) that was largely welcomed by the print industry.
In last summer’s Emergency Budget Osborne had said corporation tax would be cut from its current level of 20% to 19% in 2017, and 18% by 2020. However, in yesterday’s Budget he announced further cuts, and said the rate for all companies would fall to 17% by April 2020.
Also announced were proposed reductions in business taxes. Around 90% of small businesses will benefit from lower stamp duty on commercial property.
However, arguably the biggest news was that small businesses with properties with an annual rateable value of less than £12,000 will become exempt from business rates. And firms with premises that have a rateable value of less than £51,000 will qualify for tapered relief. Previously the upper limit was £18,000. The changes come in on 1 April 2017.
Annual threshold for 100% relief on business rates for small firms is to rise from £6,000 to £12,000 and the higher rate from £18,000 to £51,000, exempting 600,000 businesses.
A new higher rate income tax threshold of £45,000, up from £42,286, was announced and the personal allowance will increase to £11,500 in April 2017, reducing the tax paid by basic rate taxpayers by around £180 per year. It is currently £10,600 though an increase to £11,000 is already planned for 6 April this year.
Dani Novick, managing director of Mercury Search & Selection, said this would benefit the “vast majority of people in the print industry”, as most people earn less than the new higher rate tax threshold.
BPIF chief executive Charles Jarrold said: “With forecasts for growth in the world economy and in world trade being revised down by the Office for Budget Responsibility, the Chancellor has had to produce a budget that reflects a much weaker future economic outlook.
“Nevertheless he appears to have listened to business concerns about the mounting cost burdens companies are facing and has avoided measures that would have added further to business taxes and costs.
“The extra reduction in the headline corporation tax rate is good news, as are the planned changes to the scope and indexation of business rates going forward.”
Many analysts considered the biggest surprise of the Budget to be a tax on the sugar content of soft drinks that will see £520m raised – the equivalent of around 18 to 24p per litre – to be spent by the government on funding primary school sports.
Novick said it would be interesting to see if the sugar tax has any effect on packaging suppliers.
“There is speculation on what the impact on consumer pockets and habits will be, which together with encouraging reformulation, is of course the point,” she said.
“However in competitive markets, drinks manufacturers will look at all ways to recover the costs of this tax, which may put pressure on suppliers.”
Overall though, Novick felt the Budget did not generate “a great deal of excitement” among her print contacts and felt it was light on new announcements.
“Many of the changes have been pre-announced so there hasn’t been much in the way of surprises good or bad, so I think overall: fairly positive for SMEs, but generally business as usual.”
Printers had mixed views about the budget, which also saw the chancellor freeze fuel duty for the sixth year in a row.
Terrye Teverson, managing director of Launceston-based KCS Print, said: “One of the key things for us in Cornwall is that fuel prices won't go up. This helps stabilise our carriage bills but more importantly helps staff who often travel long distances in rural areas to get to their workplace.
“Cuts to corporation tax in 2020 will be welcome to allow us to put more money into future investments and increase productivity. Any savings on rates will similarly be used to expand the business rather than borrowing, making us more competitive going forward.”
But CFH Docmail managing director Dave Broadway felt certain issues were not covered: “There was no mention of climate change or the environment or the government’s promises in Paris.
“Worse, [Osborne] has actually increased tax breaks for fossil fuels because they are "suffering from low oil prices" and put nothing on fuel duty even though consumers are all benefitting from those same low oil prices.
“If oil continues to crash in the wake of a gathering momentum in green energy in spite of his government's best efforts to stop it - will he continue to try and hold back the tide?”