Britain will hike taxes on its biggest companies in 2023 as it begins to repair government finances in the wake of the pandemic, the worst economic slump in more than three centuries and the messy Brexit divorce from its largest trading partner.
Speaking in parliament on Wednesday, UK finance minister Rishi Sunak pledged another £65 billion to extend emergency support measures for workers and businesses, while making the case that taxes will need to rise once the economic pain caused by the coronavirus pandemic has eased.
“Just as it would be irresponsible to withdraw support too soon it would also be irresponsible to allow future borrowing and debt to be left unchecked,” he said, cautioning that rising interest rates could make debt levels unsustainable.
The UK government has borrowed vast sums of money to fund over £400 billion in stimulus during the crisis. Total government debt has soared to £2 trillion, or close to 100% of GDP, a level not seen since the 1960s, according to the Office for National Statistics.
Sunak announced plans to hike corporation tax from 19% to 25%, which he said would still be below the level in most major economies. The higher rate will take effect in April 2023 and will only apply to companies with annual profits of £250,000 and above, affecting 10% of businesses, he added. Companies with profit below £50,000 per year will continue to be taxed at the lower rate, with a tapered rate introduced for profits above £50,000.
Business groups warned the tax hike could make Britain less competitive and ultimately undermine the economic recovery.
