Finance Minister Rishi Sunak is taking part in a national “clap for caregivers” to thank the work of the British Health Service (NHS) and medical staff across the country as they fight the coronavirus pandemic. of the Foreign and Commonwealth Office (FCO) on 16 April 2020 in London.
Tolga Akmen | WPA pool | Getty Images
LONDON – British Finance Minister Rishi Sunak announced on Wednesday that the UK corporate tax rate will rise to 25% in April 2023 as the government seeks to restore public finances in the wake of the Covid-19 pandemic.
In its budget statement on Wednesday, Sunak said the changes would take effect after the Office of Budget Responsibility, a public body that makes independent forecasts, expects the economy to return to its level before the Covid.
“Secondly, I am protecting small businesses with a profit of £ 50,000 ($ 69,816) or less, by creating a small profit rate that is maintained at the current rate of 19%,” Sunak told the House of Commons. “This means that about 70% of the businesses – 1.4 million businesses – will be completely untouched.”
Above £ 50,000 a tax will be introduced so that only companies with a profit of more than £ 250,000 are taxed at the full 25% tax.
GDP forecasts
The OBR now expects the UK economy to return to its pre-Covid level by mid-2022, with GDP at 4% in 2021 and 7.3% in 2022.
However, since the start of the pandemic, 17% of GDP, the government has borrowed a peacetime record of £ 355 billion and expects to borrow a further £ 234 billion (10.3% of GDP) next year. Loans will then fall to 4.5% of GDP in 2022/23 and 3.5% in 2023/24. The underlying debt is expected to rise from 88.8% of GDP this year to 93.8% next year, with the highest point being 97.1% in 2023/24.
“While it is right to help people and businesses through an acute crisis like this, in normal times the state should not borrow to pay for everyday public spending,” Sunak said.
“Secondly, in the medium term we can not allow our debt to continue to rise and given how high our debt is now, we need to pay close attention to its affordability. And thirdly, it is wise to take advantage of lower interest rates to invest in. capital projects that can drive our future growth. ‘
Sunak also announced the freezing of personal tax thresholds and removed the “incremental benefit created as thresholds with inflation rose.
Covid’s response amounts to £ 407 billion
The budget comes because nationwide Covid-19 restrictions will be phased out over the coming months, which will be fully removed on June 21st. Meanwhile, more than 20 million people in the UK have now received a first dose of vaccine.
The government has embarked on unprecedented public spending as the economy has shown its sharpest contraction in more than 300 years in 2020. With Sunak’s last fiscal announcement in November, he revealed the country’s largest peacetime budget on the record.
Sunak on Wednesday announced a further £ 65 billion fiscal measure for the 2021/22 financial year, bringing the government’s total response since the start of the pandemic to £ 407 billion.
This included an extension of the country’s scheme and a boost of £ 20 a week for Universal Credit, the UK social security payment, until September, along with £ 5 billion in extra grants to businesses to help reopen.
Non-essential shops will receive grants of up to £ 6,000 per premises from April, while hospitality and leisure facilities, which will later open in line with the government’s gradual relief, will be eligible for up to £ 18,000.
The Coronavirus Jobs Retention Scheme will continue to subsidize 80% of the wages of employees added on an ongoing basis until the end of September, but businesses will be asked to contribute 10% in July and 20% in August when the economy reopens.
Sunak also extended the reduced VAT rate of 5% (a value-added tax) until September 30, along with continued reductions in business rates and stamp duties and further allowances to the self-employed.
The limit for contactless bank card payments will increase to £ 100 in an effort to further free up consumer spending.