UK Chancellor of the Exchequer Rishi Sunak has announced the national 2021 budget, unveiling increased government spending, a 50% business rates discount for retail and hospitality, and the cancellation of fuel prices increases.
Mark Savage is a Tax Director at BDO in Guernsey and has taken the time to analyser the latest announcement. He said Mr Sunak’s outlook was optimistic in the face of a stark “economic backdrop.”
“The UK has had to borrow money at a huge rate – the largest levels outside of wartime – and needs to start paying that back,” he said.
“One way of generating revenue is raising taxes, and Mr Sunak has already done this by introducing a ‘health and social care levy’ and proposing an increase in the rate of corporation tax from 19% to 25%, both of which will apply from April 2023.
“With those policies already in place, it wasn’t surprising that there weren’t any headline-grabbing changes to tax rates in the Budget.”
Pictured: Mr Sunka has laid out his plan for supporting the UK economy “post-covid”.
Mr Sunak announced measures to keep London competitive as an international finance centre, which could be of interest to banks, trusts, and financiers in Guernsey.
“The Treasury also announced stamp duty reliefs on Insurance Linked Security (ILS) structures and a consultation on the possibility of allowing companies to formally redomicile to the UK. These measures are designed to keep the City of London competitive as an International Finance Centre, so will be of interest to our own financial services community,” said Mr Savage.
Additionally, newer lower domestic rates of Air Passenger Duty have been announced from 2023, and Mr Savage said “it will be interesting to Guernsey residents to see if this can be extended to flights to and from the Bailiwick.”
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