Rishi Sunak and the wider Government have spent billions on keeping the economy afloat during the pandemic, with the ONS recently detailing coronavirus themed spending could reach almost £400billion by March. While the Chancellor has repeatedly detailed he would do “whatever it takes” to support families, he has also admitted this debt would have to be covered eventually and many expect he’ll raise tax rates in the upcoming budget, with inheritance tax, income tax and capital gains tax being identified as prime targets.
However, Rishi is also reportedly considering a corporation tax increase, a cost usually associated with more large organisations.
Ed Molyneux, the CEO and co-founder of FreeAgent, commented on this, pushing the Chancellor to focus his efforts on big business as opposed to SMEs: “I can certainly sympathise with UK businesses who will be unhappy about any plans to increase tax on corporations.
“However, I believe the government’s priority should be helping small businesses as that is arguably a more important issue for getting through this pandemic.
“The SME sector is the backbone of our economy, representing around 99 percent of businesses in the UK.
While many may assume a corporation tax raise would only impact large companies, Ed went on to warn the changes could harm the self-employed: “Although the self-employed don’t pay corporation tax, many freelancers and contractors opt to run their small businesses as limited companies, which means they do pay it.
“Therefore any rise in the corporation tax rate would actually hit a significant number of these smaller businesses who are already struggling and have been left high and dry in terms of government support through the pandemic.
“The SME sector, representing around 99 percent of UK businesses, needs support at this crucial time of recession in order to invest and create jobs during the months of recovery ahead.
“If the government intends to spend some of the extra tax revenue from the rate hike on small businesses then this could support an important part of the economy that has been largely ignored of late.”
Rishi Sunak has been pushed to alter SEISS rules in a bid to help excluded workers.
Thus far, the Chancellor has refused to budge, noting the Government’s efforts have already been unprecedentedly generous.
Recently, the Chancellor was pushed on why he hasn’t altered SEISS in Parliament and he had the following response: “With regard to our support for the self employed it’s worth noting, not that you would know it from what the honourable lady said, that almost three million people have benefited from support to the tune of around £20billion.
“I do believe that’s comprehensive, it’s indeed certainly more comprehensive and generous support than almost any other country that I can find has provided.
“But of course we will always look at other suggestions we will receive, and I will continue to do that.”
Do you have a money dilemma which you’d like a financial expert’s opinion on? If you would like to ask one of our finance experts a question, please email your query to email@example.com.