LONDON: Britain will raise its corporation tax on the biggest and most profitable companies to 25% from 19% from 2023, the first hike in nearly half a century, but it will temper the burden with a “super deduction” to spur investment.
Finance minister Rishi Sunak, unveiling his Budget in the British parliament on Wednesday, said the tax increases were fair given the vast state support to businesses during the pandemic.
“The government is providing businesses with over 100 billion pounds of support to get through this pandemic so it is fair and necessary to ask them to contribute to our recovery,” Sunak told Parliament.
“The UK will still have the lowest corporation tax rate in the G7,” Sunak said. The corporation tax hike — by far the biggest tax increase announced by Sunak in the Budget — will come in from 2023, when the economy is expected to regain its pre-pandemic size. The measure is forecast to raise 11.9 billion pounds in the 2023-24 tax year, rising to 17.2 billion pounds in 2025-26. But lobby group Confederation of British Industry said the hike was sending a worrying signal to investors.