Osborne backs business with channel friendly budget measures

Channel NewsChannel Strategy

Corporation tax reduction will help the most

The government’s budget offered largely good news for companies working in the channel, with George Osborne promising to “unashamedly back business”.

The Chancellor claimed to put growth in business at the top of his priorities, boosting infrastructure, stabilising the economy, and giving tax cuts to offer UK firms a leg up.

The economy may be some way from returning to something approaching full strength, with figures for national growth barely perceptible.

But against the backdrop of one of Britain’s leading high street retailers, GAME, biting the dust, a number of measures to try and aid businesses have been put in place.

A reduction in corporation tax will see the basic rate fall from 26 percent last year to 24 percent next month, with a view to further yearly reductions over the next two years.

Osborne claimed the UK has “one of the lowest rates of business tax in the world”, with the “biggest sustained reduction for a generation”.

He heralded the move as an advertisement for jobs and investment in the UK, with a lower rate than Germany, France, Japan and the US.

For smaller business the corporation tax figure will stay at 20 percent.  Smaller business were also helped with a £20 billion loan scheme to promote growth.

For businesses which have been struggling to get moving, with banks tightening purse strings, this will offer a lifeline.

The much discussed 50p tax rate was dropped, good news for those earning over £150,000.  At the other end of the spectrum, the minimum tax threshold was raised to above £9,000, which could help to boost lacklustre consumer spending.

As part of Osborne’s ambition to “turn Britain into Europe’s technology centre”, businesses relying on highspeed broadband were told more of plans to introduce better internet infrastructure.

Ultrafast broadband rollout in ten major cities will receive £100 million, with another £50 million set aside for less built up areas.  Osborne looked to get ahead of not just European rivals, but to compete on a world scale.  With a glaring lack of 4G connectivity his claims look someway off just yet.

However, overall the implications of the Budget for the channel largely seem to be positive.

Clive Longbottom, Service Director at Quocirca, believes that the big news that will re-energise the channel is the corporation tax reduction.

“It is a case of their biggest customers are suddenly going to find themselves with extra money in their pockets because of the corporation tax change,” Longbottom told ChannelBiz. “Therefore there should be more pull for goods.”

“The change for the large organisations should put some real impetus into business to business growth.”

“The changes themselves aren’t going to do too much for consumer growth, but if you are in the channel, on the B2B side, which counts to you more?”

Just as the tax drops under Gordon aimed at boosting were never likely to see consumers head out to the high street, it seems that personal tax allowance changes may also have little effect.

“Putting an extra few hundred into the consumers pocket isn’t going to make everyone go out and buy an 80 inch TV,” he says.

“Overall the biggest thing is the corporation tax – its great news for large channel operators.”

Read also :