U.K. Plans Business Tax Hike to Pay for Covid, Sunday Times Says
U.K. Chancellor of the Exchequer Rishi Sunak will announce plans to increase corporation tax when he delivers his budget next month, the Sunday Times reported.
The current 19% rate will be raised by at least 1 percentage point initially this fall, the newspaper said, without saying where it got the information. Sunak will also outline plans for successive increases in the years through to the next general election, with the rate likely to reach as much as 23% by the eve of that poll, it said.
The Chancellor has spent about 300 billion pounds ($420 billion) on various programs to keep businesses afloat during the coronavirus pandemic. With the U.K.’s vaccination program motoring ahead, attention is turning to how to repay the glut of borrowing. The government expects to have vaccinated all adults by the end of July.
The corporation tax increase will help fund an extension of the existing furlough program, value-added tax cuts and business-support loans until at least August, the Sunday Times said. The measures are currently due to expire in March.
Government borrowing climbed to 270.6 billion pounds in the first 10 months of the fiscal year, according to the Office for National Statistics. The country’s total debt now exceeds 2 trillion pounds after the worst economic slump in more than 300 years.
Sunak will also extend a partial sales tax holiday for U.K. property purchases, the Sunday Times reported, citing insiders. But he won’t yet go through with a potential plan to increase the rates of capital gains tax to move them in line with income tax bands, the newspaper said. An overhaul of commercial property taxes has also been delayed until the fall.
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