The first budget from the UK’s new Chancellor, Rishi Sunak, was far from the typical Brexit worries that have become accustomed to over the last few years and instead coronavirus was at the forefront of everybody’s minds.
The economy is estimated to grow by 1.1% (down from a prediction of 1.4% last year), borrowing is also set to be £14.6billion more this year than previously forecast and notes a U-turn on the austerity drive brought in a decade ago.
So while there are positives to be sought from this budget, it’s timing has drawn comparisions with the 2008 economic crash from the Advertising Association who have otherwise welcomed the budget.
For those working in marketing, media and the creative industries, here are five key points from the budget.
No more subscription tax
The government has made the decision to bring e-books, digital newspapers, emags and journals and other digital content in-line with their physical counterparts by abolishing the subscription tax. Print products have enjoyed this perk since 1973 and with the increasing number of users of ereaders and digital subscription platforms through Apple and the like this will be welcome news.
“Digital publications are subject to VAT. That can’t be right. So today I’m abolishing the Reading Tax. From 1 December, just in time for Christmas, books, newspapers, magazines or academic journals, however they are read, will have no VAT charge whatsoever.”Rishi Sunak, Chancellor of the Exchequer
The removal of the tax in time for Christmas 2020 will come at a cost of more than £800m over the next five years.
In his inaugral address, Sunak announced that from 1st April 2020, tech giants such as Facebook, Google, Amazon, Netflix and others will have a 2% digital services tax imposed on them.
Though the policy did not name the tech giants directly, it did go as far as saying the tax would affect “large multinational enterprises with revenue derived from the provision of a social media service, a search engine or an online marketplace to UK users”
This has been a policy that has long been bandied around the halls of Westminster, as a way to impose a tax directly on Silicon Valley companies, who have regularly come under criticism for using complex setups which allow them to record UK advertising revenues in EU subsidiaries.
This allowed Facebook to pay just £28million in UK corporation tax in 2018, despite sales of £1.6 billion, Google were also criticised for paying £65.3million in tax for sales of £1.4 billion in the same year.
This tax would be applied to companies who have more than £500million in revenue of which more than £25million is from british consumers.
HMRC predicts that the tax could result in £515million annually in additional income by the end of the 2025 financial year .
Tax rates cut
Business rates in England have been cut to benefit, museums, art galleries, theatres, caravan parks, gyms, small hotels, sports clubs and nightclubs
Sunak estimates that he is giving qualifying businesses tax cuts of up to £25,000 each and which is estimated to cost £1 billion. Tax rates for Scotland, Wales and Northern Ireland are devolved and do not come under the jurisdiction of the Chancellor.
SME Small Loans
The government also offered support to SME’s who are struggling with the downturn by backing temporary small loans. The Bank of Englands slashed the borrowing rates from 0.75% to 0.25%.
Other tax cuts
There were also numerous other tax cuts announced in the budget. Tampon tax was eradicated. Beer, spirits, cider and wine all saw their tax rates being frozen.
Fuel duty was frozen for another year despite calls for it to be increased to push drivers towards more environmentally friendly means of transport and increase the uptake of elecetric vehicles.
The tax on tobacco was raised and pubs saw business rates cut from £1000 to £5000 this year.
There is a plan to tackle coronavirus
Businesses can breathe a small sigh of relief.
There is a £30billion stimulus package planned for the economy, of this £12billion is to be used to dircetly tackle the coronavirus. £7billion has been earmarked for businesses and £5billion for the NHS.
A £30bn stimulus package has been planned for the economy. Of this £12bn will be implemented to directly tackle the coronavirus. £7bn has been flagged for business and £5bn for the NHS.
The impact of the pandemic cannot yet be estimated due to, international disruption and the potential mass quarantines of consumers and the workforce. Some businesses will undoubtedly be benefited from the conditions. Hand soaps, sanitiser and toilet roll have been flying off the shelves, meanwhile food delivery companies and e-commerce firms have capitalised on the publics reluctance to leave their properties.
There is likely to be a net loss to the economy and worldwide markets take a hit. In the meantime employees will be able to claim Statutory Sick Pay (SSP) from the first day of self-isolation. Self-employed workers will be able to claim contributory Employment Support Allowance.
In his speech, Sunak provided an update to the introduction of a plastic packaging tax. This will come into force from April 2022, the consultation perido will be open on the proposal until May 2020.
To tackle the scourge of plastic waste, we will deliver our manifesto promise to introduce a new plastics packaging tax. From April 2022, we will charge manufacturers and importers £200 per tonne on packaging made of less than 30% recycled plasticRishi Sunak, Chancellor of the Exchequer
Sunak also laid out plans to invest £7.2million into a nationwide system to track waste movements across the country.