Press release

3 Mar 2021 London, GB

Corporation Tax: Going back ten years – EY comments on the Chancellor’s Budget

In a move that went further than many expected, the Chancellor today set the UK’s corporation tax rate back a decade, with the rise in 2023 to 25% falling between the 2011 rate of 26% and 2012 rate of 24%.

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Chris Sanger
Chris Sanger

EY Global Government and Risk Tax Leader and EY EMEIA and UK&I (Tax Centre) Tax Policy Leader

Passionate about improving tax policy. Problem solver. Globetrotter

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Chris Sanger, EY’s Head of Tax Policy, comments on Corporation Tax:

“In a move that went further than many expected, the Chancellor today set the UK’s corporation tax rate back a decade, with the rise in 2023 to 25% falling between the 2011 rate of 26% and 2012 rate of 24%. This firmly abandons the aspiration of former Chancellors, going back to George Osborne, of having the lowest rate in the G20 in favour of the far less competitive challenge of the best in the G7. This is the single biggest tax rise in the Budget, raising over £17bn a year by the end of the parliament and is almost 60% of the total tax increase.

“The Chancellor has slightly tempered this for some by retaining the reduced rate of 19% for those with small profits of up to £50,000, and then tapering the relief up to £250,000. However, even in this area, the Chancellor seems to be focusing on small rather than small and medium sized businesses, as the previous system of reduce rate that existed until 2015 applied to business with profits of up to £1,500,000 per annum.

“Whilst there was some good news for those with losses, who can now carry up to £2 million of losses back three years, larger businesses may prefer to use those losses against future profits which would otherwise pay tax at 25%. 

“All in all, today was a tough day for larger businesses – with a six percentage point increase in corporation tax rate leaving them funding 60% of today’s tax increases. Whilst there was some relief on losses and today’s 19% percent rate was kept for some, these were targeted at smaller companies.”

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