Budget 2021: Business Taxes

Corporation tax – In April 2023, the rate companies pay on their profits will rise from 19% to 25%. The higher rate still leaves the UK with the lowest corporation tax rate in the G7.

Smaller businesses will continue paying the lower rate. Only those making £250,000 or more in profit will pay a higher rate that will be tapered from 19% to 23%.

‘Super deduction’ tax cuts – a temporary tax relief equivalent to 130%  tax of the cost of investment in plants and machinery, between April this year and the end of March 2023. It means businesses will be able to offset the full cost of new equipment against tax, plus an additional 30%. The Treasury says this will mean they can reduce their tax bill by up to 25p for every eligible £1 they invest.

The VAT reduction for the hospitality and tourism industries will be extended for six months until 30th September. The chancellor said 150,000 businesses employing 2.4 million people “need our support” to protect jobs as the coronavirus restrictions are eased.

Extension of carry-back period for losses for Corporation Tax and Income Tax – The chancellor temporarily extended the period over which businesses may carry-back trading losses from one year to three years for company accounting periods ending in the period 1 April 2020 to 31 March 2022.

Hospitality and leisure businesses will pay no business rates for three months and then one-third of their normal rate for the final nine months of the year.

Alcohol and fuel duty tax cancelled – Mr Sunak commented: ”All alcohol duties frozen for the second year in a row – only the third time in two decades.”

‘And right now, to keep the cost of living low, I’m not prepared to increase the cost of a tank of fuel. So the planned increase in fuel duty is also cancelled.’