Budget provides boost for the media sector

Ian Govier, Partner at Grant Thornton in Southampton, comments on the how the Chancellor’s budget may impact the media industry:

"Overall, today's budget announcement gives a commitment to support the media sector, and some changes that will have an immediate effect. 

“The Chancellor has given the green light to lure back multinational companies to the UK by reducing the headline rate of corporation tax more quickly than expected, along with further targeted reductions, and reforming the taxation of foreign profits to enable UK companies with foreign subsidiaries to compete more effectively. 

“As ever though, we need to see the detail of the proposed changes to get a real sense of just how effective they are.  The migration of companies out of the UK is an increasingly big problem in the media sector and any steps taken to curb this ‘brain drain’, by making the system simpler and more beneficial is welcome to keep our industry talent in the UK. Reducing some complexity in the tax law is a good signal to send as part of the Government's plan to make the UK a great place to be for business. The question is whether these changes will be enough for companies with migration plans to stop in their tracks or do a u-turn and come back to the UK. 

“I am not convinced the Chancellor has done enough to encourage the move of Intellectual Property (IP) back to the UK. The ‘patent box’ extension with a 10% rate of corporation tax on income from patent rights, which was announced under the Labour Government in the 2009 Pre-Budget Report, is not wide enough as it does not include brands and trademarks otherwise known as 'intangible assets'. In comparison Hong Kong, a traditionally  low corporate tax rate area, has already announced that intangible assets do include brands and hallmarks. Inclusion of this step in the Budget, coupled with the other changes, could have made a real difference,” Govier concludes.