British Chancellor of the Exchequer Rishi Sunak is taking part in a national “applause for carers” to thank the work of UK National Health Service (NHS) workers and front-line medical staff across the country as they fight with the coronavirus pandemic, on the steps 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 will rise to 25% in April 2023 as the government seeks to restore public finances following the Covid-19 pandemic.
In his budget statement on Wednesday, Sunak said the changes would take effect after the Office of Budgetary Responsibility, a public body that provides independent forecasts, expected the economy to return to its pre-Covid level.
“Second, I protect small businesses with profits of £ 50,000 ($ 69,816) or less, 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 companies – 1.4 million companies – will be completely unaffected.”
Over £ 50,000, a taper will be introduced so that only companies with profits above £ 250,000 will be taxed at the total rate of 25%.
GDP forecast
OBR now expects the UK economy to return to its precovid level by mid-2022, with GDP up 4% in 2021 and 7.3% in 2022.
However, the government has borrowed a record £ 355 billion since the beginning of the peace since the onset of the pandemic, 17% of GDP, and expects to borrow another £ 234 billion (10.3% of GDP) a year. future. Loans then fall to 4.5% of GDP in 2022/23 and 3.5% in 2023/24. The underlying debt is expected to grow from 88.8% of GDP this year to 93.8% next year, reaching 97.1% in 2023/24.
“While it is fair to help people and businesses through an acute crisis like this, in normal times, the state should not borrow to pay for daily public spending,” Sunak said.
“Secondly, in the medium term, we cannot allow our debt to continue to grow and given how big our debt is now, we need to pay special attention to its accessibility. And thirdly, it is rational to we take advantage of lower interest rates to invest in capital projects that can drive our future growth. “
Sunak also announced a freeze on personal tax thresholds, eliminating “the incremental benefit created if thresholds continue to rise with inflation.”
The leader of the opposition Labor Party, Keir Starmer, accused Sunak’s budget of “papering over cracks, rather than rebuilding the foundations” of the British economy.
Covid’s response is £ 407 billion
The budget comes as national restrictions on Covid-19 are set to be phased out in the coming months, culminating in a complete elimination on June 21. Meanwhile, more than 20 million people in the UK have now received a first dose of vaccine.
The government has engaged in unprecedented public spending as the economy records the strongest contraction in 300 years in 2020. In Sunak’s latest fiscal announcement in November, it revealed the country’s largest peacetime budget. .
On Wednesday, Sunak announced another £ 65 billion fiscal measure for fiscal year 2021/22, bringing the government’s total response since the start of the pandemic to £ 407 billion.
This included an extension of the country’s power scheme and a £ 20-a-week increase in Universal Credit, the UK’s social security payment, until September, along with £ 5bn in additional grants to businesses to help to reopen.
From April, non-essential retail outlets will receive subsidies of up to £ 6,000 per seat, while hospitality and leisure venues, which subsequently open in line with the gradual reduction of government restrictions, will be eligible. for up to £ 18,000.
The Coronavirus job retention scheme will continue to subsidize 80% of employees’ salaries that were taken over by the end of September, but companies will be required to contribute 10% in July and 20% in August as the economy reopens. .
Sunak also extended the reduced VAT rate of 5% (a value-added sales tax) until September 30, along with continued reductions in business rates and stamp duty and additional allowances for the self-employed.
The limit for contactless bank card payments will increase to GBP 100 in a bid to further release consumer spending.