The government has published a brief summary of the highlights of the budget unveiled by Chancellor Rishi Sunak on 3 March. The key takeaways are summarised, in bullet-point format, under five headings: Covid-19, protecting jobs and livelihoods, strengthening public finances, an investment-led recovery, and Scotland, Wales, and Northern Ireland.
Meanwhile, HMRC has produced a commentary on the budget’s implications for corporation tax, and specifically rate changes, the small profits rate, and marginal relief. The key points to note here are that the rate of corporation tax for larger firms will increase to 25% from the financial year beginning 1 April 2023.
For businesses with profits of £50,000 or less – 70% of businesses currently actively trading – the rate will remain at 19% until further notice. Beyond that point, a tapered rate of corporation tax will apply, with only those companies with profits of £250,000 or more paying the full 25%.
The ABI’s response included a warm welcome for the launch of Green Savings bonds as a measure designed to stimulate investment in new ventures and technologies likely to have a positive impact on climate and the environment.
ABI director general Huw Evans noted that ‘as large-scale institutional investors managing £1.6trillion of assets, insurance and long-term savings providers have a crucial role to play in supporting infrastructure and green investment. The reviews of Solvency II and the Future Regulatory Framework for Financial Services are key in unlocking investment in green infrastructure and support the Government’s net zero ambitions.’
The freezing of the pensions lifetime allowance got a somewhat frostier reception. The ABI suggested that this ‘creates uncertainty about pension saving at a time when we should be encouraging more people to be financially resilient.’
The ABI greeted the increase in corporation tax from 2023 philosophically. While noting that no business ever welcomes tax rises, the insurer body accepted that the government faces significant challenges in restoring the health of public finances. It did, however, express the hope that the government will ‘stick to a clear strategy’ with ‘a detailed corporate tax roadmap’.
A simple, stable, predictable tax regime is needed, the ABI argues, to support the UK’s future competitiveness.
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