Corporation tax is to be cut 24 per cent, a further 1 per cent than previously proposed, chancellor George Osborne announced in today’s Budget.
Mr Osborne announced the cut, to take effect next month, will be followed by two further drops over the next two years to reach a 22 per cent rate of corporation tax by 2014.
Small companies will have a tax rate of 20 per cent, and those earning up to £77,000 will have their tax calculated on a cash basis, on the money that passes through their businesses.
Fuel duty is still set to rise by 3p per litre in August, but vehicle excise duty will rise by inflation, and will be frozen for road hauliers.
The higher rate of personal income tax will be cut to 45p to the pound on earnings over £150,0000 from April next year, while the Chancellor is targeting a personal allowance increase of £10,000, starting with a £630 increase in the amount you can earn before you’re taxed to £8,105 next month, followed by a £1,100 rise to £9,205 next year.
From next year, 20 million taxpayers will receive an annual tax statement detailing exactly what they have paid in tax, and providing details on what their tax is being spent on, Mr Osborne said.
Mr Osborne said in his delivery of the |Budget that the new personal tax measures will benefit 24 million people earning less than £100,000, and that those earning the minimum wage will see their tax bill cut by half. The reduction of income tax for the highest paid will provide five times more money than the previous 50p rate, he said.
Alcohol duty is unchanged, but tobacco duty will rise by 5 per cent above inflation.
Mr Osborne also announced reforms on VAT which will see current “loopholes” closed, but there will still be no VAT on books, newspaper, food and childrens’ clothing.