By Matthew Appleby
Industry figures have slammed last week’s Budget in which chancellor Gordon Brown cut income tax and corporation tax. But many industry body representatives still feel short-changed.
HTA commercial director Andrew Maxted said: “It’s such a disappointment. It’s more about playing around with the rules without making a substantial change anywhere. The headline reduction of income tax is good news but doing away with the 10 per cent entry rate will equal that out. There’s nothing in there to stimulate consumer demand. Larger businesses will welcome the two per cent cut in corporation tax but environmental taxes will take away any benefit for many companies. What will hurt many growers and landscapers is upping corporation tax for smaller companies. There’s nothing for the garden industry to shout about.”
GIMA director Neil Gow said: “On the surface it appears great with more money to spend in our pockets and reduced income tax.
“We need to get customers spending to help the retail and manufacturing industry.
“But these concessions come 12 months away, whereas price increases in fuel, cigarettes and booze are up this week.
“The reduction in corporation tax appears good news. However, overall, it’s pretty disappointing but no less then we expected.
Forum of Private Business chief executive Nick Goulding said the reduction in the main rate of corporation tax will benefit larger firms, not the smaller ones that make up the majority of the private sector.
The two rates of corporation tax have been brought closer together, with the small business rate, for companies with profits of under £300,000, being raised initially from 19 per cent to 20 cent and then to 22 per cent by 2009. The top rate of corporation tax falls from 30 per cent to 28 per cent. But small firms will benefit from tax relief on capital investments of up to £50,000 — this will rise from 50 to 100 per cent by April 2008.
Tax Relief Changes
- The 25 per cent annual tax relief on plant and machinery is being cut to 20 per cent.
- The annual tax relief on long-life assets rises from six per cent to 10 per cent from next year.
- The definition of “long-life asset” changes to include categories of capital expenditure previously classed as plant and machinery.
- The Industrial Buildings Allowance will be phased out over the next four years.
- The Writing Down Allowance is reduced from 25 per cent to 20 per cent.