Corporate tax will rise to 25% in 2023

Sunak has put “profitable” businesses in the crosshairs of his initial plans to raise revenue to pay for the £407billion cost of Covid support measures.

Corporate tax rates will also be staggered for the first time, with companies making an annual profit of £50,000 or less continuing to pay the current rate of 19%.

Rates will then be reduced by up to £250,000 of profits when businesses pay the new 25% rate from 2023.

Sunak said only 10% of businesses would pay the new higher rate.

Treasury documents show the rise in corporation tax is set to rise between £12bn and £17bn a year from 2023.

The move reverses a decade of corporation tax cuts by previous chancellors and will bring the UK’s main rate down to the same level as China’s at 25%.

The Government will also invest more than £100m in a Taxpayer Protection Task Force of 1,265 HMRC staff to tackle fraudulent Covid Support Scheme claims.

Better news for businesses, a new “super-deduction” regime will come into effect from April 1, 2021 to March 31, 2023.

Construction companies that invest in new qualifying plants and machinery will receive a 130% capital cost allowance in the first year.

Sunak said: “Under the existing rules, a construction company buying £10m of new equipment could reduce its taxable income, in the year it invests, by just £2.6m.

“With the super deduction they can now reduce it by £13million.”

Rob Oliver, CEO of the Construction Equipment Association, said: “We look forward to reviewing the details, but on the face of it it looks like this will be the perfect time to renew the machine parks of factory hirers and contractors. .

“These tax benefits are clearly a misunderstanding for swallowing a corporate tax hike in the future.

Paul Hamer, CEO of Sir Robert McAlpine, said: “The planned ‘super deductions’ for investing companies are welcome news and could see innovation accelerate across the sector as companies commit money. in new technologies and sustainable construction solutions.

“The positive ripple effect could be significant and we will be looking closely at how this could benefit our business and future plans.”