The Daily Update: Whatever It Takes

Rishi Sunak, the UK chancellor, delivered his second budget yesterday and promised to do ‘whatever it takes’ to help the UK survive and recover from the current pandemic, whilst at the same time start to address Britain's battered finances. He announced an additional GBP65bn in support for the economy, taking total spending on the pandemic for the UK to over GBP350bn. Sunak told parliament ‘Much has changed but one thing has stayed the same, I said I would do whatever it takes. I have done and I will do so’ adding ‘We will recover. This budget meets the moment, with a three-part plan to protect the jobs and livelihoods of the British people’.

Tax rises include the headline rate of corporation tax going from 19% to 25% from 2023 (although smaller firms will be exempt) and income tax thresholds frozen for the next 5 years, along with Inheritance tax, pensions lifetime allowances and annual capital gains tax exemptions. The corporation tax increase will only apply to company profits above £250,000 (just 10% of companies) and whether this tax rise ever comes into effect is doubtful.

There will also be a new UK Infrastructure Bank, based in Leeds. It will be given GBP12bn of capital and GBP10bn of government guarantees to help drive an investment boom, especially in the north of England. It was also announced the locations of eight new freeports in England, which it's hoped will help regenerate deprived areas.

One interesting idea that the Chancellor unveiled and dubbed the ‘biggest business tax cut in modern British history’ was that of a 'super deduction' tax relief for businesses in a bid to spur investment. Firms that invest in new plant and machinery assets over the next couple of years will be able to reduce their tax bills by 130 per cent of the cost.

However, it was not all doom and gloom for the UK’s coffers. There was a small, unexpected boon. Heavier drinking during the pandemic has landed the Treasury with a £800m tax windfall even though pubs, clubs and restaurants have all been shuttered. Another example of the British people doing 'whatever it takes' to help restore public finances by every way possible.