Date03 Mar 2021
Many in Wales had hoped for an extension to the Government business support scheme and had expected tax increases to pay for it. Both were confirmed today, although it is hard to see that the tax increases will balance the books. The Chancellor is clearly relying on growth unless there are more tax increases to come later in the year. In the face of forecast Government borrowing of £352bn, I would not have wanted to be the one who must balance job protection with higher tax charges.
Very pleasingly the furlough and self-employed support schemes are to be extended, as is the reduction in VAT for the hospitality sector, meaning, when the pubs re-open we can buy more with our pound. There was plenty more good news for Welsh businesses with post COVID restart grants and further grants for apprentice job creation. The Government believes businesses are hoarding cash and there was a surprising encouragement to spend that money with a super tax deduction for capital expenditure. Some businesses have surplus cash, but many have struggled. Not unexpectedly those businesses with losses are able to obtain tax repayments through an extended 3-year loss carry back.
It seemed like the support spending would never end in this speech. We waited for the pain, but it did not quite arrive. Income tax, national insurance and VAT rates will remain as promised by the Government, but corporation tax rates will increase to 25% from April 2023 for the largest companies, those with profits of more than £250,000. Below £50,000 the corporation tax rate will remain at 19% with a tapered rate in between.
The point at which people start paying income tax will be frozen to 2026, as will the point at which people in Wales will pay the higher rate of tax. Because our own rate of income tax in Wales continues to track the UK rate, we will also face this change.
If you fancy owning your own pub, the Government will help you buy it through a Community Fund.
Now that would be an expensive round!
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