A Budget for business?: the experts’ view
● Sunak’s tax raid
Investors were quick to criticise Rishi Sunak’s corporation tax “raid”, which will see the rate that larger businesses pay rise by six points: from 19% now, to 25% in 2023, said the FT. The Treasury estimates the move – which marks the first time the tax has been raised since 1974 – will raise £17.2bn in 2025-6. But fund managers such as Richard Buxton of Jupiter said the increase amounted to a “sizeable bite” of business profits, which could “reduce the attraction of UK equities to both domestic and international investors”. Tax experts were equally downbeat, said Philip Aldrick in The Times. Chas Roy-Chowdhury, former head of tax at the Association of Chartered Certified Accountants, called it “a seriously bad idea”, predicting not just “profit-shifting” but full-blown “businessshifting” if it gives multinationals cold feet about Britain. “Banks have begun moving operations because of Brexit. This will give them another nudge,” he said. “Dublin has half the rate.”
● Grudging acceptance
Smaller companies (with profits of £50,000 or less), which account for 70% of UK business, are exempt from the rise.
Yet within the affected blue-chip community, the mood was upbeat, said John Collingridge in The Sunday Times. Rather than issuing “howls of anguish”, corporate grandees appear to have “grudgingly” accepted that the tax is a burden companies must bear in return for “incredible state largesse over the past year”. Perhaps the virus has focused minds: many businesses are more “worried about whether they will exist in 2023” than by future tax bills. Indeed, some question whether “the six-point leap” will ever happen. “Two years is plenty of time to reconsider or water down the measure.”
● “The Amazon tax cut”
The main growth policy in the Budget was Sunak’s “super deduction” tax relief – a £25bn giveaway over two years, aimed at lifting business investment immediately, said Philip Aldrick. The Chancellor dubbed it “the largest business tax cut in modern British history”. But the scheme has already raised concerns over spurious – and legitimate – claims. Campaigners argue that the “blanket nature” of the relief means that the controversially low tax bills paid, for example, by Amazon, could be “entirely wiped out”.