Key points from the Budget from a retail perspective:
- Sugar levy from 2018 »
- Business rates relief for small traders »
- Corporation tax rates down »
- Excise Duty increases »
- VAT measures on overseas online retailers »
The headline news is the imposition of a sugar levy on the soft drinks industry, which is planned to take effect in April 2018. The levy will affect producers and importers of soft drinks that contain added sugar, with a main rate of charge for drinks containing more than 5 grams of sugar per 100 millilitres and a higher rate for drinks with more than 8 grams or more sugar. Milk and pure juices will be exempt and there will be a relief for small producers. A consultation will be launched over the summer.
DWF has been active in this debate over the last 18 months and is currently advising a number of trade associations in relation to this issue, if you wish to discuss the implications for your business please get in touch.
The bigger news for the retail sector is the raft of proposals affecting business rates. From April 2017, there will be an increase to the small business rate relief. Businesses with a property with a rateable value of £12,000 and below will receive 100% relief. Businesses with a property with a rateable value between £12,000 and £15,000 will receive tapered relief. It is estimated that 600,000 small businesses will benefit from the full relief.
From April 2020, increases to business rates will rise in line with the Retail Price Index, instead of the higher Consumer Price Index, in what is expected to be a welcome announcement to all rate-paying businesses.
The rate of corporation tax (currently 20% and set to be reduced to 19% in 2017) is to be reduced to 17% in 2020.
There is a freeze on fuel duties, together with a freeze on duty rates on beer, cider and spirits, with other alcohol rising in line with inflation as previously planned. There will be consultations later this year on the reform of procedures for the collection of alcohol duty and specific anti-fraud measures. Tobacco duty rates on all tobacco products will increase by 2% above RPI inflation, and duty on hand-rolling tobacco will also increase by an additional 3% above this rate, to 5% above RPI. These changes will come into effect from 6pm on 16 March 2016.
The Chancellor announced that firm action is being taken to protect the UK market from unfair online competition where overseas traders from beyond the EU avoid paying UK VAT, and undercut online and high street retailers.
Proposals include HMRC requiring non-compliant overseas traders to appoint a tax representative in the UK (meaning bank guarantees required here). If traders continue to evade VAT and no action is taken to prevent the fraud, then online marketplaces can be made liable for the VAT
EU traders selling online into the UK may be able to use the VAT 'One Stop Shop' in their home country.