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Mini-Budget: Businesses

On Friday 23rd September Chancellor Kwasi Kwarteng announced his Growth Plan, which will tackle energy costs to help reduce inflation, support businesses and help households. Here are the changes being made;

Corporation Tax

Under the previous government’s plans, the rate of Corporation Tax was to increase from 19% to 25% from April 2023 for firms making more than £250,000 profit, around 10% of actively trading companies.

Companies making between £50,000 and £250,000 would also face a rise in Corporation Tax, with the rate increasing incrementally from 19% to 25% depending on how much profit a firm was making. For the remaining 70% of actively trading companies, those who make profits of £50,000 or less, Corporation Tax was to remain at 19%.

The government has now cancelled this planned increase. Rather than rising to 25% from April 2023, the rate will remain at 19% for all firms, regardless of the amount of profit made.

At 19% the UK Corporation Tax rate is significantly lower than the rest of the G7 and the lowest in the G20.

How does cutting Corporation Tax help grow the economy and raise living standards?

  • Competitive business taxes are important to growing the economy as they can incentivise investment and enterprise. The government wants to grow the economy by creating the conditions for businesses to thrive, which will create jobs and increase investment in the UK.

  • Large businesses employ over 10 million workers and the government wants to support them to deliver the growth needed to boost living standards across the UK.

  • The UK’s internationally competitive corporate tax system can boost business investment which drives up productivity and powers economic growth. This can result in lower prices for consumers, higher wages for employees, more jobs created as businesses grow and higher living standards in the UK.

  • The Government believes that robust growth is vital to funding vital public services in the UK and keeping taxes low for working families across the UK so that people keep more of what they earn.

Work and Investment

Businesses will also gain more relief by making the Annual Investment Allowance £1 million permanent, rather than letting it return to £200,000 in March 2023 as originally planned.

For more information, look on website here

Contains public sector information licensed under the Open Government Licence v3.0, except where otherwise stated


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