BUDGET 2023: Hunt dismisses calls to delay corporation tax hike
JEREMY Hunt resisted demands from Tory MPs, including Boris Johnson, to scrap April's increase in corporation tax from 19 per cent to 25 per cent, but he instead promised a generous set of reliefs to help firms reduce their bills.
A new policy of “full expensing” will mean that every single pound a company invests in IT equipment, plant or machinery can be deducted in full and immediately from taxable profit, a cut worth an average of £9 billion a year for every year it is in place.
It is “the most generous capital allowance regime of any advanced economy”, he told MPs.
But the rate from April will be exactly double the 12.5 per cent rate in the Republic, which some businesses see as having the potential to stymie inward investment.
Aisléan Nicholson, partner at Deloitte in Belfast, said: “For Northern Ireland businesses, the loss of the super-deduction (which was designed to ensure businesses didn't defer capital expenditure until the higher tax rate applies) will be offset by the move to a 100 per cent first year allowance for the next three years, with a view to this being made permanent.
“In effect, this means full expensing of capital expenditure on qualifying assets (including IT equipment, plant and machinery) in the year of expenditure.
“For companies investing in special rate and long-life assets, they will benefit from a 50 per cent first year allowance during this period, and when taken in combination with the permanent setting of the annual investment allowance at £1 million from the autumn, this should continue to encourage capital investment and is important for maintaining investment by and subsequently the productivity of many local businesses.”
The fuel duty freeze and the 5p cut will be maintained for another year, saving the average driver around £100.
Taking advantage of tax flexibility since leaving the European Union, a "Brexit pubs guarantee" will see duty on draught products up to 11p lower than in supermarkets.
The OBR forecasts that inflation in the UK will fall from 10.7 per cent in the final quarter of last year to 2.9 per cent by the end of 2023, partly due to the impact of the cost-cutting measures.