Corporation tax increase is the talking point

UK Budget 2021 - Corporation tax increase is the talking point

Clare Bentata discusses the tax announcements made in the Chancellor's Spring Budge in this extract. 

Whilst we still lack the full details of today’s Budget, much of it was in line with expectations. Despite the pressure building over the last week, the Chancellor resisted calls to break the so-called ‘triple tax-lock’. There was no increase in the main rates of income tax, national insurance or VAT. Nevertheless, from a tax perspective, there were some surprises along the way.

Business taxes

This Budget focused heavily on business, with a variety of measures introduced to encourage investment. However, the headline announcement for most companies was the increase to the rate of corporation tax. The current rate of 19% will remain for now, but from April 2023 this will rise to 25%. This is expected to raise an additional £16 billion a year for the government.

Personal taxes

This was a surprisingly quiet budget for personal taxes. No increases to the headline rates of income tax, national insurance, inheritance tax or, surprisingly, capital gains tax. Alcohol duties and fuel duties were also frozen at their current levels. All this means that taxpayers can expect to take home the same amount of money as they do now - and hopefully go out and spend it as the lockdown lifts.