Rishi Sunak today announced corporation tax will increase from 19 per cent to 25 per cent in 2023 as he said it is 'fair and necessary' to ask businesses to pay more to help the UK recover from the coronavirus crisis.
The Chancellor stressed that the 25 per cent rate will still be the lowest of any G7 nation and will only hit firms once experts believe the economy will be back to normal.
Meanwhile, small businesses with profits of £50,000 or less will continue to be taxed at 19 per cent, with Mr Sunak claiming protections will mean it is only the top 10 per cent of companies which will have to pay the full top rate.
According to the Budget Red Book, it will see an extra £11.9 billion raised in 2023/24, £16.25 billion in 2024/25 and £17.2 billion in 2025/26.
The massive hike was described by the influential Institute for Fiscal Studies think tank as 'risky' while business leaders said moving from 19 per cent to 25 per cent 'in one leap will cause a sharp intake of breath'.Insurance Loans Mortgage Attorney Credit Lawyer
But Mr Sunak also tried to sweeten the deal for firms as he unveiled a new 'super-deduction' tax cut for businesses.
The deduction will encourage businesses to invest in the UK by allowing them to significantly reduce their tax bill when they invest over the next two years.
Firms will be able to reduce their tax bill by 130 per cent of the cost of the investment in a move which Mr Sunak said will boost business investment by £20billion a year.
Chancellor Rishi Sunak today announced the corporation tax rate will increase from 19 per cent to 25 per cent in April 2023
The corporation tax hike will bring in an extra £11.9 billion in 2023/24, £16.25 billion in 2024/25 and £17.2 billion in 2025/26, according to Treasury estimates
Corporation tax receipts in 2018-19 were £55.1 billion and £63.2 billion in 2019-20.
The hike to 25 per cent will mean corporation tax returning to levels not seen in the UK since 2011.
Announcing the corporation tax hike, Mr Sunak told the House of Commons: 'The Government is providing businesses with over £100billion of support to get through this pandemic so it is fair and necessary to ask them to contribute to our recovery.Insurance Loans Mortgage Attorney Credit Lawyer
'So the second step I am taking today is that in 2023 the rate of corporation tax paid on company profits will increase to 25 per cent.
'Even after this change the United Kingdom will still have the lowest corporation tax rate in the G7.'
Mr Sunak said a series of 'crucial protections' will ensure the tax hike is applied fairly to businesses.
He said: 'First, this new higher rate won't take effect until April 2023,