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CT increase likely to hit UK competitiveness

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The increase in the main rate of corporation tax to 25% from April 2023 will see the UK move from 6th to 21st place in the global corporate tax league table, reports accountancy firm UHY Hacker Young. The current 19% rate places the UK near the top of the table, with only the Republic of Ireland (12.5%), Romania (16%), Belarus (18%) and Croatia (18%) applying lower rates. Following the 6% increase, the UK will move to a fraction below the global average (25.2%) and slightly ahead of other G7 countries (26%).

The firm notes that the UK increase will hit businesses, particularly when taken together with the health and social care levy which adds 1.25% to the NICs bill for every employee.

Andrew Snowdon, head of tax at UHY Hacker Young in the UK said: ‘For years the UK has been known as an established locale for international business, and these upcoming tax hikes may lead investors to question the UK as a place to set up shop.

‘The government is undertaking a fine balancing act between keeping the UK attractive for business owners large and small, as well as remain competitive in the global arena. Companies are still feeling the sting of the last two years, therefore a sensible corporate tax policy is crucial to maintain confidence in the UK economy.’

The focus on headline rates does not take into account other measures – for example, lower rates for smaller companies, or incentives or allowances. As Subarna Banerjee, chair of UHY notes: ‘SMEs are a crucial component of international economies. In light of many countries’ post-covid recovery plans, it is encouraging to see so many continuing to support these smaller enterprises which form sustainable foundations of their economies.’

Issue: 1577
Categories: News