Entrepreneurs may avoid hike in corporation tax
ENTREPENEURS could be spared from an expected hike in corporation tax in the Budget this week with a lower rate introduced for small businesses, The Sunday Telegraph has learned.
Rishi Sunak, the Chancellor of the Exchequer, is weighing up bringing back the small profits rate, axed by George Osborne in 2015 to support small- to medium-sized companies.
This lower rate taxed smaller companies with turnover of up to £300,000 at 20 per cent of profits. One source said: “They are going to bring back the lower corporation tax rate that got faded out under George Osborne.”
Smaller companies are also expected to be given back a suite of tax allowances for plant and machines which will help manufacturers in the North.
As part of the changes Mr Sunak is expected to increase corporation tax for larger firms to as much as 25 per cent by the end of this Parliament in 2024.
The small profits rate was axed by Mr Osborne when he slashed the main cor
poration tax rate in the first few years of the last decade. Mr Sunak could also give National Insurance holidays to companies which hire new staff in a bid to encourage firms to take on employees as the pandemic eases, sources say.
Any change would be expected to come in after winding up of the Government’s furlough scheme, which has seen taxpayers fund the jobs of people who cannot work during the pandemic. The furlough scheme is currently due to finish at the end of April.
John Glen, a Treasury minister, said there would be measures to support new hires in a webinar with the Centre for Policy Studies earlier this month.
He said: “If businesses are going to be able to hire new people we need to make new interventions. I am expecting the Chancellor to be very keen to do everything he can in the Budget … to support businesses, to support the creation of jobs.”
A CPS report two years ago identified how National Insurance was “one of the main disincentives towards employing people.”
“This is of particular importance at a time when we are considering how to respond to increased automation and the spectre of future job losses”.
The Treasury declined to comment.