A tax on sugary drinks, duty rise on tobacco, tax changes and r were among the headline-grabbers of today’s 2016 Budget.
Chancellor George Osborne unveiled his measures in the Commons this afternoon, beginning his Budget with a forecast for the UK economy.
Growth was revised down for 2016 to 2% compared with 2.4% at the time of the autumn statement for 2015 and 2016, and revised down to 2.2% in 2017 (2.5%) and 2.1% in each year after that (previous forecasts for 2.4% in 2018 and 2.3% in each of 2019 and 2020).
The sugar tax, which looks sure to grab the lion’s share of the headlines, aims to raise £520m in a two-part levy on companies – one for total sugar content above 5g per 100ml (eg Fanta or Sprite)and one for drinks with more than 8g per 100ml (Pepsi, Coke, Irn-Bru, etc) – to be introduced in two years’ time. Pure fruit juice and milk are excluded. The monies will be used to fund sport and longer school days.
On the sugar tax, FWD chief executive James Bielby said: “FWD will be working closely with the Government throughout the consolation process and make sure the views of members are represented as the new regulations move towards implementation in 2018.
Duties were generally kept frozen. Fuel duty was frozen for the sixth consecutive year, saving £75 for the average driver and considerably more for wholesalers with large fleets. Commercial stamp duty will be zero on properties up to £150,000 and 2% on the next £200,000, but a top rate of 5% on £250,000.
Duty on beer, cider and whisky is also frozen, but duty on ready made cigarettes rises by 2% (or an average of 21p per pack) above inflation, while RYO tobacco rises 3%. Wine is also hit by a duty rise mstched to inflation.
Tax allowances will increase to £11,500 by next April, and there’s an increase in the 40p tax threshold to £45,000 from next April. (£42,385 from this April). Corporation tax will be cut to 17% by April 2020.
Finally, many smaller wholesalers – and their customers – may breathe a sigh of relief with the news that the threshold for small business rate relief is to increase from £6,000 to £15,000. From April next year 600,000 small businesses will pay no business rates. London gets full retention of its business rates next April, three years earlier than planned.