UK budget: life sciences industry welcomes tax reduction

Chancellor George Osborne has confirmed a further decrease of one per cent for the main rate of corporation tax during the UK's 2012 budget announcement yesterday in a move welcomed the UK life sciences industry.

Both the Association of the British Pharmaceutical Industry (ABPI) and the BioIndustry Association (BIA) said they thought Osborne's plans would benefit business in the country, with ABPI CEO Stephen Whitehead saying it was a move “towards a more competitive tax regime”.

The reduced rate now means corporation tax will decrease from 26 per cent to 24 per cent in April 2012, to 23 per cent in April 2013, eventually reaching 22 per cent by April 2014.

Corporation tax had previously only been expected to fall to 25 per cent this year.

Osborne said 2014's planned rate of 22 per cent was a “headline rate that is not just lower than our competitors, but dramatically lower – 18 per cent lower than the US, 16 per cent lower than Japan, 12 per cent below France and 8 per cent below Germany”.

He continued: "[It is] an advertisement for investment and jobs in Britain, and a rate that puts our country within sight of a 20 per cent rate of business tax that would align basic rate income tax, the small companies rate and the corporation tax rate."

Commenting on what the plans would mean for life sciences companies in the UK the ABPI's Whitehead said: “The measures announced in the budget statement will help improve the UK's general business environment and allow pharmaceutical companies operating here to remain competitive in a global market.”

The BIA's CEO, Glyn Edwards, was similarly upbeat, highlighting other aspects of the budget including its £100m investment for new university research facilities and an increase to the grant limit of the enterprise management incentive scheme, which aims to support small higher-risk companies.

However, Edwards criticised the lack of a 'Citizens Innovation Fund' in the budget, a proposal submitted to the government by the BIA to allow individuals make a tax-free investment of up to £15,000 a year in innovative businesses.

“These funds would make the government an enabler rather than a provider of much needed investment in innovative businesses,” said Edwards.

Further business-orientated moves that did make the budget include plans for an independent review of competitiveness to be carried out by Lord Michael Heseltine, and a target of £1trn for exports by 2020.

Commenting on the budget, Labour leader Ed Miliband derided previous government-backed plans to boost business growth in the country, including the Business Growth Fund - an independent fund of up to £2.5bn also backed by five of the UK's main banks.

“The Business Growth Fund - six regional offices opened. And how many businesses benefiting? Six. One for each office.

“The Chancellor's plan has failed. We needed a plan for growth that will work. We needed a guarantee on youth jobs. We needed a British investment bank to help small businesses. But on growth, on jobs, on how we pay our way in the world, this Chancellor has failed.“