UK budget ‘a kick in the teeth for printers’ says BPIF

UK Chancellor Gordon Brown’s attempt to grab the headlines with a vote-catching two pence cut in income tax comes at a heavy price for printers, says the BPIF. While welcoming the corporation tax cut for larger companies from 30 per cent to 28 per cent announced in this year’s budget, the BPIF points out that as an industry dominated by smaller companies, printing will be hit particularly hard by the forthcoming three percentage point increase in the level of corporation tax payable by smaller firms and the reduction from 25 per cent to 20 per cent in capital allowances for those who invest in equipment or buildings.

BPIF corporate affairs director Andrew Brown said: ‘There is little for printers to celebrate in this year’s budget. The double whammy of increased corporation tax payable by small firms and the cut in capital allowances is a real kick in the teeth for our members and will further erode their profitability as well as make it harder for them to invest in new equipment and technologies. Although there are some positive measures that will help printing companies meet the challenges they face in adapting to changing customer requirements, such as increased support for skills training, more tax relief on long-life assets and the new Environmental Credit, the overall reaction for our members is likely to be one of disappointment and dismay as small firms are asked to pick up the tab for the Chancellor’s give-and take budget.’       

Richard Lambert, director general of the CBI, made it clear that this budget was not an all rounder for business as a whole, ‘There are a number of sectors and individual companies that will be clear winners, but others, with heavy capital investment requirements and lowish profitability, will be initially potentially negatively affected’.
The printing industry certainly fits the latter description.

The increase of the Small Companies Tax Rate will be phased in, with a rise from the present level of 19 per cent to 20 per cent in April 2007, 21 per cent in April 2008 and 22 per cent in April 2009. Bad news will also be phased in for printers with the two pence per liter rise in fuel costs that will come into affect in October.

Some benefits are offered in the form of an SME R&D tax credit rise from 150 per cent to 175 per cent and an annual capital investment allowance of 50k, both of which come into effect in 2008/09. The Treasury here is encouraging small companies to invest in the future.