Britain will extend a year-long business rates exemption for retail, hospitality and leisure businesses to the end of June, Chancellor Rishi Sunak said on Wednesday as he announced a costly extension of his emergency aid programmes to see the economy through its current coronavirus lockdown.
“For the remaining nine months of the (financial) year, business rates will still be discounted by two-thirds,” Sunak told parliament during his annual budget statement.
He said the extension amounted to a tax cut of £6 billion, on top of 10 billion pounds from the year-long exemption.
Sunak, however, announced a tax hike for many businesses as he began to focus on fixing the public finances.
He said the economy will regain its pre-pandemic size in the middle of 2022, six months earlier than previously forecast, helped by Europe’s fastest Covid-19 vaccination programme.
But it will remain 3 per cent smaller in five years’ time than it would have been without the damage wrought by the coronavirus crisis and extra support is needed now as the country remains under coronavirus restrictions, he said.
Among the new support measures was a five-month extension of his huge jobs rescue plan and more help for the self-employed, the continuation of an emergency increase in welfare payments, and an extension of a VAT cut for the hospitality sector.
A tax cut for home-buyers was also extended until the end of June.
“First, we will continue doing whatever it takes to support the British people and businesses through this moment of crisis,” Sunak told parliament.
“Second, once we are on the way to recovery, we will need to begin fixing the public finances – and I want to be honest today about our plans to do that. And, third, in today’s Budget we begin the work of building our future economy.”
In a first move to raise taxes, Sunak announced he would raise corporation tax to 25 per cent from 19 per cent from 2023, by which time the economy should be past the pandemic crisis.
“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,” he said.
Businesses with profits of £50,000 pounds or less would pay a new Small Profits Rate, maintained at the current rate of 19 per cent.
Below are details of the policies Sunak announced.
Corporation Tax Hike
Britain will raise corporation tax, paid on company profits, to 25 per cent from 19 per cent from 2023. Small businesses with profits of £50,000 or less will be exempt, they will benefit from a Small Profits Rate and be taxed at the current rate of 19 per cent.
Britain will seek to incentivise more business investment in items such as new equipment over the next two years by boosting the amount firms can offset against tax.
Freeze On Personal Tax
Britain will freeze the amount of money that people can earn tax-free and also the threshold for the higher rate of income tax until 2026.
Job Protection Scheme Extension
Britain will extend its job-protecting furlough programme by five more months until the end of September and expand support for the self-employed too.
Low-Income Household Top-Up
A top-up of £20 per week to a state benefit for low-income households will remain in place for a further six months, Sunak said.
Business Rates Holiday
Britain will extend a year-long business rates exemption for retail, hospitality and leisure businesses to the end of June, he said.
Property Sales Tax, Mortgages
Sunak extended tax breaks for home-buyers until October, keeping many property purchases exempt from stamp duty land tax. He also announced a government-funded mortgage guarantee scheme for first-time buyers who cannot afford large deposits required by lenders.