3 March 2021
Zubin Patel, international tax partner at Deloitte, commented:
“Given the fiscal backdrop, there is significant pressure on the Chancellor to raise revenue. An increase in corporation tax, from 19% to 25% from April 2023, is considered to be the most attractive option to begin the process of repaying the deficit. Corporation tax made up 6% of total tax receipts in 2019/20, and this increase will bring in an extra £12bn in revenue in its first year to which the rate applies.
“While an increase in corporation tax was widely anticipated, the steep overnight increase in April 2023 was not, and this is particularly stark considering that the Chancellor aborted a proposed cut to corporation tax to 17% just a year ago. While some elements of the business community will argue that it remains too soon to target businesses with extra tax, the Chancellor rightly points out that the UK has the lowest headline rate of corporation tax within the G7, and so the Government regards an increase in the tax rate as reasonable and responsible. Small businesses can breathe a sigh of relief with the additional measures to mitigate the impact of the tax rise, including the introduction of a small business tax rate, the carry back of losses and a new enhanced deduction for some capital expenditure.
“The Chancellor is trying to balance the need to raise revenue while still maintaining the UK’s status as an attractive place to do business, particularly in light of the UK’s departure from the EU. Given the Biden administration’s proposal to increase the US federal income tax rate from 21% to 28%, there could be an expectation that other countries will be under pressure to increase business taxation in due course.”
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• Rachel McEleney - personal tax (07826 891 752)
• Zubin Patel – corporate tax (07795 968 483)
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