The promise, made at the CBI’s annual dinner, was made with the aim to boost investment ahead of the increase in corporation tax from 19% to 25% from April 2023 for company profits over £250,000.
Speaking at The Brewery in Central London the Chancellor stated that in order to get the tax cuts, businesses needed to ‘invest more, train more and innovate more’ as these were areas which Sunak highlighted as the UK’s ‘weaknesses. He added that this was ‘at the centre’ of his economic outlook.
The Chancellor said: ‘In the Autumn Budget we will cut your taxes to encourage you to do all those things. That is the path to higher productivity, higher living standards, and a more prosperous and secure future.’
Sunak mentioned the temporary 50% cut to business rates during the pandemic however added that ‘of course, there’s more to do’. The Chancellor used the speech to thank the CBI for their support during the Covid-19 pandemic and to reassure the CBI of the government’s pro-business history, stating ‘never, ever doubt we are on your side’.
In the Budget last year Sunak said he would increase the UK’s corporation tax from 19% to 25%, which aims to raise around £17bn annually. Small companies will continue to pay the lower 19% rate.
At the same time, the Chancellor also introduced a temporary ‘super-deduction’ for two years which offered a 130% relief on the purchase of equipment which is equivalent to 25p off a company’s tax bill. The move was done to encourage businesses to invest sooner.
The CBI has previously warned about the impact of ending the scheme, stating that capital investment will fall in 2023 as corporation tax rises at the same time. It stated that this will ‘likely send business investment as a share of gross domestic product to the lowest level in the G7’.
In response to the Chancellor’s speech, CBI president Lord Karan Bilimoria also spoke and urged the government to ‘act immediately’ on the cost of living crisis, stating that he is worried by the current trajectory as it will bring businesses ‘the highest tax burden in 70 years’ and ‘will stifle our recovery and growth’.
Bilimoria also urged the Chancellor to help companies to invest by introducing a permanent successor scheme to the super deduction, which he described as a ‘stroke of genius by the Chancellor’ and ‘of the utmost importance’.
He also called on the government to extend a recovery loan scheme to help businesses access finance and eventually create a long-term replacement and bring forward a UK digital strategy.
The Chancellor closed his speech by stating that the government’s ‘firm plan is to reduce and reform’ business taxes but that businesses needed to their bit too.
Sunak said: ‘I believe our most exciting companies are still to be founded, our most talented people are still to be taught, and our best ideas are still to be discovered.’
