Budget speech extract:
Madam Deputy Speaker, The government is providing businesses with
over £100bn of support to get through this pandemic, so it is fair
and necessary to ask them to contribute to our recovery. So the
second step I’m taking today is that in 2023, the rate of
corporation tax, paid on company profits, will increase to 25%.
Even after this change the UK will still have the lowest
corporation tax rate in the G7 – lower than the United States,
Canada, Italy, Japan, Germany and France. And we’re also
introducing some crucial protections. First, this new higher rate
won’t take effect until April 2023, well after the point when the
OBR expect the economy to have recovered. And even then, because
corporation tax is only charged on profits, any struggling
businesses will, by definition, be unaffected.
Second, I’m protecting small businesses with profits of £50,000
or less, by creating a Small Profits Rate, maintained at the
current rate of 19%. This means around 70% of companies – 1.4
million businesses - will be completely unaffected.
And third, we will introduce a taper above £50,000, so that only
businesses with profits of £250,000 or greater will be taxed at
the full 25% rate. That means only 10% of all companies will pay
the full higher rate. So yes, it’s a tax rise on company profits.
But only on the larger, most profitable companies. And only in
two years’ time. And I wanted to announce this now because I
think that, for business, certainty matters.
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...we need to do even more to encourage businesses to invest
right now. Business investment creates jobs, lifts growth, spurs
innovation and drives productivity. For decades we’ve lagged
behind our international peers. Right now, while many businesses
are struggling, others have been able to build up significant
cash reserves. We need to unlock that investment; we need an
investment-led recovery.
So today I can announce the ‘Super Deduction’. For the next two
years, when companies invest, they can reduce their tax bill…
…not just by a proportion of the cost of that investment, as they
do now… …or even by 100% of the cost, the so-called full
expensing some have called for… …with the Super Deduction they
can now reduce their tax bill by 130% of the cost. Let me give
the House an example
Under the existing rules, a construction firm buying £10m of new
equipment could reduce their taxable income, in the year they
invest, by £2.6m. With the Super Deduction, they can now reduce
it by £13 million. We’ve never tried this before in our country.
