UK to Raise Corporation Tax As Britain Seeks to Cover Cost of Covid
THE UK’s corporation tax rate will be double Ireland’s by 2023 as Britain seeks to cover the costs of Covid supports and stimulus spending.
Britain will lift its corporate tax rate to 25pc in 2023 the Chancellor of the Exchequer, Rishi Sunak, announced in his budget speech.
The hike reverses a policy under former Chancellor George Osborne to cut the UK rate to compete with Ireland’s 12.5pc rate and marks Mr Sunak out as the biggest tax-raising Chancellor since Norman Lamont in 1993.
Small businesses, with profits of £50,000 (€57,775) or less, will continue to be taxed at Britain’s current 19pc under the UK plan, but big corporations will face the higher rate.
The move will be hugely welcomed by policymakers in the Republic of Ireland, who will see it as an opportunity to attract further foreign investment here.
Mr Sunak’s warning that he will demand more money from companies and individual taxpayers in the coming years makes him one of the first policymakers from rich countries to address the hit from Covid to public finances.
Dermot O’Leary, chief economist at Goodbody Stockbrokers, said the decision by the UK to increase its rate of corporation tax will help Ireland.
“It will help in conjunction with, obviously, access to the European market that Ireland has, and the UK doesn’t have to the same extent. I think it’s a further help to the Irish economy in terms of attracting foreign direct investment, particularly from North America,” Mr O’Leary said.
Mr O’Leary also pointed to what he said was the “stability” of corporation tax here, where the 12.5pc rate has been in place since 2003.
“Ireland has maintained the stability of its tax regime as well, and today’s announcement in the UK just shows that there’s instability there, and firms we know like stability in tax regimes. They like low taxes, of course, but they do like to know what they will pay in the future and Ireland has maintained that stability,” he added.
In his speech to the House of Commons today Mr Sunak said the Covid-19 pandemic has been responsible for the “largest, most comprehensive and sustained economic shocks this country has ever faced”.
Mr Sunak added that the UK Government has delivered “one of the largest, most comprehensive and sustained responses this country has ever seen”.
He said the measures to support the UK economy amounted to £65bn over this year and next and would take the total level of government support to £407bn.
