The Chancellor of the Exchequer, Rishi Sunak, has delivered his second Budget. The exceptional circumstances of the past year have forced the Chancellor to tread a fine line between revenue raising and continuing to support struggling businesses, individuals, and the fragile economic recovery.
The main fiscal measure of note was the announcement of a 6% rise in the rate of corporation tax, increasing tax on corporate profits above £250,000 to 25% from April 2023. Although the extent of this increase is perhaps greater than expected, it still leaves the UK with the lowest headline corporation tax rate in the G7, amongst the lowest in the G20 and comparable with the likes of the Netherlands and Luxembourg (25% and 24.94% respectively). Combined with a holding company regime which is as attractive as ever, the Chancellor has clearly calculated that this is a necessary move, and one which will not deter investment in the UK.
Measures to mitigate the impact of the tax rise for businesses were also introduced. Most notably, a 130% upfront capital allowances super-deduction, which will be available for investment in plant and machinery for two years from April 2021. This is a welcome measure, perhaps even a necessity given that, without it, many businesses would have deferred expenditure until introduction of the higher rate of corporation tax in 2023, stifling investment when the UK economy needs it most.