'In 2023 the rate of corporation tax, paid on company profits, will increase to 25%' Chancellor Rishi Sunak says it is 'fair and necessary' for business to contribute to the economic recovery Budget2021
Business will greet corporation tax rise with a 'sharp intake of breath' as a decade of cuts is reversed.
Small firms with profits under £50,000 will escape the rise.The rate of corporation tax, paid on company profits, is to rise to 25% from 19%, starting in 2023.Chancellor Rishi Sunak said it was "fair and necessary" for business to contribute to the economic recovery.
But he also unveiled a "small profits rate" to benefit small firms, and extra tax breaks to spur investment.Paul Johnson, director of the Institute for Studies, said the rise in the headline rate was at the top end of expectations, calling it "risky".
Other economists said the move rolled back a decade of cuts, while the CBI employers' group said there would be a "sharp intake of breath" across UK businesses.Mr Sunak maintained that even with the rise to 25% "the UK will still have the lowest corporation tax rate in the G7" group of leading nations. headtopics.com
"The government is providing business with over £100bn of support to get through this pandemic, so it is fair and necessary to ask them to contribute to our recovery," the chancellor told the Commons.But he said a new small profits rate would maintain the 19% rate for firms with profits of £50,000 or less, meaning that about 70% of companies - 1.4 million businesses - would be "completely unaffected" by the tax rise.
And there will be a taper above £50,000, so that only businesses with profits of £250,000 or greater will be taxed at the full 25% rate - about 10% of firms.Mr Sunak said: "So yes, it's a tax rise on company profits. But only on the larger, most profitable companies. And only in two years' time."
image copyrightimage captionThe chancellor also announced tax breaks to boost investmentNevertheless, economist Mr Johnson described the headline rise as "huge". He tweeted: "Right at the top of expectations. Extraordinary reversal of longstanding policy. Risky."
And while Tony Danker, director-general of the CBI, welcomed many measures in the Budget, he said: "Moving corporation tax to 25% in one leap will cause a sharp intake of breath for many businesses and sends a worrying signal to those planning to invest in the UK." headtopics.com
Chris Sanger, head of tax policy at accountancy giant EY, said the rise "firmly abandons the aspiration of former chancellors, going back to George Osborne, of having the lowest rate in the G20 in favour of the far less competitive challenge of the best in the G7".Read more: BBC News (UK) »
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What about reducing public spending? Why not now? Why can't we cut the benefit handout merry-go-round. BBCPolitics I thought we were going for Singapore on Thames and to be ultra competitive in the world market post Brexit This is ToryMaths to help their mates avoid tax! FFS what's the point in waiting 2 years? Companies that have profited from the COVID crisis should be taxed now! CorporationTax Budget ToryCorruption ToryCronyism bbcnews skynews C4News