Rishi Sunak today [March 3] outlined a £65billion spending package to support the economy as it recovers from the pandemic.
But he warned that the unprecedented spending could not continue and he had to be ‘honest’ about putting the nation’s finances back on a sustainable footing.
The point at which people begin paying income tax will increase to £12,570 in April but will be maintained at that level until April 2026, meaning more people will be dragged into paying tax as wages increase.
The 40p rate threshold will increase to £50,270 and then be frozen.
Corporation tax will increase from 19% to 25% in 2023.
But a new “small profits rate” will maintain the 19% rate for firms with profits of £50,000 or less – meaning around 70% of companies – 1.4 million businesses – will be “completely unaffected” by the tax hike.
And there will be a taper above £50,000, so that only businesses with profits of £250,000 or greater will be taxed at the full 25% rate – around 10% of firms.
Ross Feeney, CEO of Tunbridge Wells Together, which runs the town’s BID [Business Improvement District] said: “We will always welcome any budget that is business friendly.
“The Government has listened and understood the great challenges faced by businesses over the past 12 months, and the steps taken in the budget provide welcome breathing space for our business community.”
He said the most helpful initiatives announced were the furlough scheme extension and additional support for hospitality and retail businesses.
But he added: “I think I would be most excited if we were seeing a six or 12 month extension to the business rates holiday for retail and hospitality businesses though, as this provides a security blanket for these businesses to get back on their feet, recover and plan for the longer term.”
He went on: “The online sales tax is a particular welcome addition, in so far as it will start to level the playfield between online and bricks & mortar businesses. This inequity has only been exaggerated by the recent lockdown, and it’s only right that a tax is applied – providing there is a reduction for predominantly high street retailers that also have online ability – otherwise it’s just another burden.”
