CGT break boosts channel
Industry welcomes tax breaks in last week's budget, but VAT hike causes some alarm
Channel players have given a cautious welcome to measures unveiled in last week’s Budget, but concerns remain over the VAT hike.
The corporation tax rate is to fall four points to 24 per cent over a four-year period, while small firms will pay 20 per cent from next year.
Derek Walton, northern region finance director at distributor Magirus, claimed this would “make UK Plc as competitive as possible”.
The 10 per cent capital gains tax rate for entrepreneurs is to be extended to cover £5m of qualifying gains – more than double the previous £2m threshold – a move welcomed by Walton.
“We have partners that are trying to build up their business and tax can take the value out of all the work they have done,” he said.
The National Insurance (NI) employers’ threshold is to be increased. Start-ups outside of London, the South East and the East of England will also be exempt from £5,000 of contributions for each of their first 10 employees.
Andy Burton, chairman of the Cloud Industry Forum, said: “None of this is going
to materially effect the economic landscape in the immediate future. [These measures] will help, but we are not going to get business moving forward just through tax structures.”
One of the budget’s most controversial measures is the VAT increase. From January, the rate will be 20 per cent.
Matthew Poyiadgi, European vice president of trade body CompTIA, urged vendors to shift as many units as possible before the raise.
“They will face an inevitable fall in profits following its introduction,” he added.