British Chancellor of the Exchequer Rishi Sunak participates in a national “applause for caregivers” to thank the work of British National Health Service (NHS) workers and leading medical staff across the country while battling 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 British 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 will take effect after the Office for Budgetary Responsibility, a public body that provides independent forecasts, expects the economy to return to its previous level at Covid. .
“Second, it protects small businesses with profits of £ 50,000 ($ 69,816) or less, creating a small profit rate, maintained at the current rate of 19%,” Sunak told the House of Commons. “This means that around 70% of companies (1.4 million companies) will not be completely affected.”
Above £ 50,000, a reduced volume will be introduced so that only companies with profits in excess of £ 250,000 will be taxed at 25% of the total.
GDP forecasts
The OBR now expects the UK economy to return to its pre-Covid level in mid-2022, with GDP growing by 4% in 2021 and 7.3% in 2022.
However, the government has borrowed a peacetime record of 355 billion pounds since the start of the pandemic, 17% of GDP, and expects to borrow 234 billion pounds (10.3%). of GDP) next year. Loans fall to 4.5% of GDP in 2022/23 and to 3.5% in 2023/24. Underlying debt is expected to increase from 88.8% of GDP this year to 93.8% next year, reaching 97.1% in 2023/24.
“While it is right to help people and businesses in an acute crisis like this, in normal times, the state should not apply for loans to pay for daily public spending,” Sunak said.
“Secondly, in the medium term, we cannot allow our debt to continue to rise and, given the high level we have now, we must pay close attention to its affordability. And thirdly, it is reasonable to take advantage of the types of lower interest rates to invest in capital projects that can drive our future growth. “
Sunak also announced the freezing of personal tax thresholds, eliminating the “incremental benefit created if thresholds continue to rise with inflation.”
Covid’s response comes to £ 407 billion
The budget comes as Covid-19’s national restrictions will be phased out over the coming months, culminating in total elimination on June 21st. Meanwhile, more than 20 million people in the UK have received the first dose of vaccine.
The government has embarked on unprecedented public spending as the economy recorded the most intense contraction in more than 300 years in 2020. In Sunak’s latest fiscal announcement in November, it unveiled the most budget great of the country in time of peace.
On Wednesday, Sunak announced fiscal measures worth £ 65 billion for the 2021/22 fiscal year, bringing the government’s total response since the start of the pandemic to £ 407 billion.
This included an extension to the country’s curriculum and a £ 20-a-week increase in Universal Credit, the UK social security payment, until September, along with £ 5bn in additional grants to companies to help the reopening.
From April, non-essential retail establishments will receive subsidies of up to £ 6,000 per premises, while catering and leisure establishments, which will later open in line with the government’s gradual reduction of restrictions, they may reach £ 18,000.
Coronavirus’s job retention program will continue to subsidize 80% of employees ’mandatory wages until the end of September, but companies will be asked to contribute 10% in July and 20% in August as they go. that the economy reopens.
Sunak also extended the reduced rate of 5% VAT (a value added tax) until September 30, along with the continued reduction in business rates and stamp duty and other subsidies to the self-employed. .
The limit for contactless bank card payments will rise to £ 100 to try to further free up consumer spending.