15:00 PM, 14th October 2022, About 12 months ago 1
The Prime Minister, Liz Truss, has announced that corporation tax will rise which will affect businesses and landlords who have incorporated their property portfolio.
Previously, in the mini-Budget, it was announced that the planned increase in corporation tax to 25%, would be ditched.
Instead, the rate of corporation tax was going to remain at 19%.
But now, the Prime Minister says that part of the mini-Budget has gone further and faster than was expected by the markets.
That means that she is moving to reassure markets and with corporation tax going up to 25%, it will raise £18 billion in taxes.
The announcement was made during a press conference, where the Prime Minister thanked the former Chancellor Kwasi Kwarteng and announced that the new Chancellor will be Jeremy Hunt, a former Foreign Secretary.
However, the Prime Minister insists that she wants to deliver a ‘low tax, high growth economy’.
Susannah Streeter, the senior investment and markets analyst at Hargreaves Lansdown, said: “The mini-budget has been torched yet again, with a corporation tax freeze the latest policy to go up in flames – risking turning Liz Truss’s growth agenda to ashes.
“Rowing back on pledges not to raise corporation tax hasn’t come as a shock, either to politicos or the markets.
“Truss had to do something to try to convince investors that unfunded tax cuts weren’t out of control, and that the government was trying to take a more responsible fiscal approach.”
She added: “The tax-cutting agenda billed as a solution to the UK’s growth problem might have won plaudits amid the Tory grass roots but on the international stage it’s been highly criticised as going against the Bank of England’s attempts to pull down punishing inflation.
“Instead of giving a boost to business, the plans have resulted instead in costs of borrowing going up for the government, consumers and companies.”
Timothy Douglas, the head of policy and campaigns at Propertymark, said: “Reflecting on the announcement that Jeremy Hunt has now entered his new position as Chancellor, we would firstly like to welcome him into his role but secondly ask that he works with us to tackle issues faced across the housing sector.
“The ex-Chancellor, Kwarteng’s introduction of the recent review to Stamp Duty was welcomed and will help to bring people’s budgets in line with rising house prices.
“It is disappointing, however, to see a U-turn on keeping Corporation Tax low announced today which will mean that next year’s rises will see agencies and company landlords tighten their belts whilst facing other growing costs.”