Tax news coming to the UK post Brexit. The UK raises corporate taxes. From the rate of 19%, it will reach 23% in a few years. In the next budget, the British Chancellor Rishi Sunak has relaunched and disseminated a broad package of tax reforms which will include, among other things, the increase in the corporate tax rate, a tax proposal advanced by Sunday Times. The goal is to be able to have funds to finance the government’s extraordinary measures in tackling the employment emergency due to the pandemic and cut VAT.
The budget should offer support to businesses that have been hit by the pandemic and lay the foundations for economic growth. On the other hand, it must offer budgetary stability. The government has spent around 300 billion pounds (350 billion euros) on aid programs for businesses during forced closures. According to the UK’s Institute of Fiscal Studies, the country would need to raise taxes or cut spending by around € 70 billion to reach budget balance.
Currently, even the digital service tax (Dst) is under scrutiny. The Digital Services Tax is an indirect sales tax resulting from e-commerce activities and digital services provided by large international multinationals. Although the OECD has postponed any attempt at mediation to mid-2021 and the European Union plans to introduce January 1, 2023, individual countries are attempting to introduce such a tax nationally. In addition, a new possible separate tax on online sales of goods appears to be in the pipeline.
As regards VAT, the current temporary reduced rate of 5% applied to hospitality and tourism it could be extended for another year. New green taxes could be part of the next ten-year fiscal strategy of the government. Excise taxes on fuels may not have increased anytime soon, but the government is considering introducing new sustainability taxes by introducing tariffs on plastic packaging and gas levies. Finally, UK government institutions are working on a major reform of the property tax.