UK Chancellor Rishi Sunak addressed the Parliament on Wendesday with his Budget statement, outlining the government fiscal plan said to “protect the jobs and livelihoods of the British people”.
Announcing the government’s decision on taxation, the Chancellor said the policy was fair. Sunak told MPs that the government will freeze personal tax thresholds and won’t raise the rates of income tax, national insurance or VAT.
He also announced an increase in corporation tax from 19% to 25%. The increase of the rate will not take effect until April 2023.
The corporation tax rate was cut to 19% from 2017 and was supposed to be reduced further to 18% and then 17% but has been held at 19%.
Rabbit in the Hat
What many have dubbed as the Budget’s rabbit in the hat was the announcement of first eight Freeport locations in England.
A Freeport is a place to carry business inside a country’s land border but where different customs rules apply.
The UK bespoke, flexible Freeports model goes further, combining customs zones with tax reliefs, planning freedoms and support for regeneration and innovation, according to the Budget.
The list of locations includes Thames (including London gateway Port and the Port of Tilbury), Liverpool City Region, Solent, East Midlands, Freeport East (Felixstowe and Harwich), Plymouth and South Devon, Humber, Teesside.
Sunak told MPs he “will do whatever it takes” to help UK economy recover. The Chancellor elaborated on the three-part plan, which aims to provide continued support for people and businesses, fix public finances and begin “work of building our future economy.”
The furlough scheme, securing financial support for British workers, will be extended until end of September. There will be no change to the terms for employees, who will continue receiving 80 percent of their salary in furlough payouts.
Among schemes extended until September will be self-employment grants and Universal Credit uplift. Sunak confirmed more money to tackle domestic violence, bigger incentives to hire apprentices, higher grants to struggling businesses, extra funds for culture, arts and sport, and new loan schemes to finance businesses.
The incentive payments the government gives businesses will be doubled to 3,000 pounds – that’s for all new hires, of any age, explained Sunak.
The government also plans to invest 126 million pounds of new money to triple the number of traineeships.
Sunak also announced the forecast by the Office for Budgetary Responsibility (OBR) that expects the economy to return to its pre-Covid level by the middle of 2021 – “six months earlier than they previously thought.”
The Budget statement comes after months of economic downfall in the UK caused by the Covid-19 pandemic, with loss of 700,000 jobs and the highest government borrowing outside of war time.