Budget 2016: Business reaction
Corporation tax cut ‘transformational’ for start-ups
Jim Duffy, CEO of Entrepreneurial Spark, said: “Reducing corporation tax to 17% by 2020 will have a transformational effect on startups and scale-ups, allowing ambitious entrepreneurs to reinvest more profits and create new jobs.
“Additional small business relief will ensure more small businesses pay no rates at all, [in England] which is to be applauded as we encourage people to start their own businesses and create wealth.
“Removing VAT loopholes for international ecommerce businesses will help the UKs digital firms be much more competitive. Since launching in 2011, startups on board the Entrepreneurial Spark business accelerator programme have secured an accumulative turnover of over £85 million, creating 1,816 jobs across the country.
“This shows just how much of an impact these small businesses have on the UK economy, and further reiterates the importance of not only supporting them but also providing them with the tools they need to scale their business on a global level.”
Bryan Buchan, CEO of Scottish Engineering, said: “Today the Chancellor has given the manufacturing engineering industry in Scotland a much needed boost.
“From a Scottish point of view he has actively intervened to support of our oil and gas industry by cutting the supplementary charge by 50% while at the same time effectively abolishing the petroleum revenue tax – both of which are backdated to January of this year.
“As regards corporation tax, his previous cut to 20% puts us as the lowest level within the G7 countries and joint lowest of the G20 countries in April. However, his promise to bring this down to 17% by 2020 will make us even more competitive in trading terms and an extremely attractive investment destination.
“A number of Scotland’s SMEs will see a positive benefit when the rate threshold is increased from £6000 to £15,000. The freeze on fuel duty will also benefit our engineering companies which have always had further to take their product to markets throughout the UK and Europe.”
CBI Director-General, Carolyn Fairbairn, said: “After a year of surprises, this was a stable Budget for business facing global stormy waters. The Chancellor has listened to our concerns about the mounting burden on firms and chosen to back business to grow the economy out of the deficit.
“Businesses will welcome the Chancellor’s permanent reforms to business rates – taking more small firms out of the regime and changing the uprating mechanism from RPI to CPI, which the CBI has long been calling for.
“The reduction in the headline Corporation Tax rate sends out a strong signal that the UK is open for global business investment, and reforms to Interest Deductibility are in rightly in line with the international consensus.
“Changes to the tax treatment of losses will make it harder for larger scale-up firms and companies that have been through tough times to play their part in the recovery.
“Progress on some key infrastructure projects, from HS3 to 5G, are positive. Investors and companies will be encouraged by the greater clarity and simplification of the Government’s energy policy.”
Andy Willox, the FSB’s Scottish policy convenor, said: “The FSB has campaigned for decades for a tax system which delivers for the small business community. Many of the measures outlined by the Chancellor should see smaller firms compete on a more level playing field with their multinational counterparts.”
On changes to business rate reliefs in England, Andy Willox, said: “The Chancellor has given a huge leg up to smaller firms south of the border.
“In the past, Scottish small firms have had a competitive advantage in this area. At the next revaluation and before the Chancellor’s measures come into force in 2017, we would encourage the next Scottish Government to review the thresholds of their landmark Small Business Bonus scheme.”
On a fuel duty freeze, he said: “The low price of fuel has given our members a real boost and we’re pleased that the Chancellor recognises that every penny spent at the pump is money not spent elsewhere.”
On a sugar levy, he said: “The new sugar tax looks to be aimed at manufacturers and is set to exempt the smallest producers. That’s encouraging though it must not tie retailers up in knots with yet more admin.”
On oil and gas tax cuts, Mr Willox, said: “The success of thousands of Scottish firms is directly and indirectly related to prospects for the oil and gas industry. Getting this industry moving has to be a national priority.”
On the £1,000 tax threshold for the sharing economy, he said: “This is an interesting move – the tax system needs to start to reflect our 21st century economy.”
FSB’s UK National Conference opens tomorrow at Glasgow’s SECC. Mr Willox said: “Today’s announcements will surely spark debate amongst small business owners and political leaders at our annual conference in Glasgow this week.”
Ian McDougall, managing director of McDougall Johnstone and finance spokesperson for Business for Scotland said: “Mr Osborne spent the first 10 minutes of his speech blaming every other economy in the world except the UK for another tax raising and deficit reducing target that he has missed. When elected in 2010 he promised that the UK would be running a surplus by this time. He has missed this by an eye watering £72.2billion and continues to mislead the public by suggesting we will be back in surplus by 2019/2020.
“On the surface the Chancellor’s support for Aberdeen and the Oil and Gas sector is positive – we welcome any support in challenging times.
“However, on cutting through the smoke and mirrors it’s clear to see an opportunity missed: scrapping the supplementary charge completely and pledging tax incentives for the exploration of new fields would have more impact.
“The productivity gap between the UK and the rest of the G7 is now the widest it has ever been.”
Liz Cameron, chief executive of Scottish Chambers of Commerce, citing moves including the freezing of fuel duty and duty on Scotch Whisky, said that the new measures were “broadly positive” for Scottish business.
As well as praising actions in reserved areas that would directly benefit business sectors north of the Border, Ms Cameron also said that moves made by the Chancellor in devolved areas such as business rates, stamp duty and education could be used to stimulate “fresh thinking” by the Scottish Government to ensure that Scotland remained competitive.
She said: “Although we await more detail of key measures, there are elements in this broadly positive budget that look like solid gains for businesses and entrepreneurs in Scotland and are clearly in tune with what the Scottish Chambers have been calling for in recent months.
“Oil and gas is a case in point. Although relatively painless for the Chancellor at a time when industry profits are so small, we very much welcome his ‘effective abolition’ of Petroleum Revenue Tax (PRT), and the halving of the supplementary charge for oil companies, backdated from 1 January. Both are a necessary response to the current crisis in the North Sea and a welcome relief.
“On business rates the Chancellor’s decision to peg rates in England and Wales against the CPI rate of 0.9% rather than the higher RPI is obviously good news for small businesses everywhere. It’s also a challenge to the Scottish Government to shadow this ‘permanent long-term saving’ in order to keep Scottish business competitive with rest of the UK. We will be calling upon the next Scottish Government to reduce even further.”
Scottish Retail Consortium director David Lonsdale said: “The Budget contains a number of welcome measures to support family finances and consumer confidence such as the increased personal income tax allowance and freeze in fuel duty, as well as a further positive reduction in corporation tax.
“Public sector borrowing is set to add a further £110 billion to the national debt over the next three years, and so eliminating the deficit and beginning to pay down the debt should help militate against the need for future tax rises on individuals or firms which could hold back growth.
“Changes to the frequency of business rates revaluations, so that they are held at least every three years, will ensure England’s rates system better reflects prevailing economic conditions and this is something we are keen to see adopted here in Scotland.
“However the Chancellor has fumbled the opportunity to substantially reduce the rates burden for all firms, and this presents Scotland with a great opportunity to deliver a far more competitive approach through the devolved administration’s own upcoming rates review.”
“The move to increase the threshold at which the larger firms rates supplement is paid is no doubt good news for firms in England. However if Scotland doesn’t follow suit then even more firms operating in Scotland will be put at a competitive disadvantage as a result of the doubling from next month of the devolved government’s large business supplement which is already set to cost firms £60 million.”
Ross Martin, chief executive of Scottish Council for Development and Industry, said: “Budget 2016 takes place as the global economy slows and concern about weak productivity is increasingly shared internationally. As the Scottish Parliament takes on new powers from next year, it will become ever more important that the UK and Scottish governments develop a common economic platform to tackle these issues in Scotland – a process which SCDI will be encouraging as the First Minister and Secretary of State for Scotland jointly appear at our Forum later this week.
“The reforms to business rates in England have implications for Scotland’s competitiveness. Three-yearly revaluations will improve their responsiveness to economic conditions, while raising the threshold for the rates supplement for larger businesses contrasts with the recent increase in rates for larger businesses in Scotland. The Scottish Government will shortly announce details of its review of local business taxation and this should be fundamental, including the overall revenue raised.”