UK Prime Minister Liz Truss: High Income Earner Tax Remains at 45% Instead of Reduction to 40%, Corporate Tax to Increase from 19% to 25% in April 2023
15th October 2022 | Hong Kong
United Kingdom (UK) Prime Minister Liz Truss has announced high income earner tax of £150,000 & above ($170,000) will remain at 45% instead of reduction to 40%, and corporate tax to increase from 19% to 25% in April 2023 (as planned, instead of terminating the corporate tax increase). 3 weeks ago (23/9/22), UK finance minister Kwasi Kwarteng had presented a mini-budget, with tax cuts of £45 billion but without plans to fund the tax cut to support UK economic growth. The UK mini-budget proposed changes had caused uncertainties including further decline in British Pounds -17.8% YTD (GBP, 3/1/22: 1.3590, 14/10/22: 1.1180), and decline in UK government bonds prices (Gilt). The UK trillion dollar pension funds for retirees came hours to collapse until the UK (United Kingdom) government steps in and promised to buy £65 billion of bonds, with the massive sell-off of UK government bonds (Gilts) triggered after UK fiscal announcement (23/9/22) including unwinding of COVID-19 stimulus. UK central bank Bank of England immediately warned of risk to UK financial stability, and intervene in the bond market (open market bond purchase) to support the bond prices. UK also announced the appointment of Jeremy Hunt as UK finance minister (4th finance minister in 3 months), replacing UK finance minister Kwasi Kwarteng. Prime Minister Liz Truss, who had been recently appointed as UK Prime Minister, admitted mistakes to the proposed mini-budget (23/9/22), and has amended & reversed some of the tax-cutting measures (14/10/22). New UK Finance Minister & Chancellor Jeremy Hunt will deliver the UK Medium-Term Fiscal Plan on 31 October, detailing action to get debt falling as a percentage of GDP over the medium term. See below on UK government update on corporate tax, and UK Prime Minister Liz Truss opening remarks.
“ UK Prime Minister Liz Truss: High Income Earner Tax Remains at 45% Instead of Reduction to 40%, Corporate Tax to Increase from 19% to 25% in April 2023 “
Elizabeth Truss was appointed Prime Minister on 6 September 2022. She was previously Secretary of State for Foreign, Commonwealth and Development Affairs from 15 September 2021. She was appointed Minister for Women and Equalities on 10 September 2019. She was elected as the Conservative MP for south west Norfolk in 2010. Elizabeth entered Parliament in 2010. She was appointed Parliamentary Under Secretary of State for Education and Childcare in September 2012. Elizabeth served as the Secretary of State for Environment, Food and Rural Affairs from July 2014 until July 2016. Elizabeth was Lord Chancellor and Secretary of State for Justice from July 2016 until June 2017. She was Chief Secretary to the Treasury from June 2017 until July 2019. Elizabeth was previously Deputy Director at Reform. She also worked in the energy and telecommunications industry for 10 years as a commercial manager and economics director, and is a qualified management accountant. Elizabeth studied philosophy, politics and economics at Merton College, Oxford. Elizabeth is married with 2 children.
Government update on Corporation Tax – 14th Oct 2022
The government has today, Friday 14 October, announced that Corporation Tax will increase to 25% from April 2023 as already legislated for, raising around £18 billion a year and acting as a down payment on its full Medium-Term Fiscal Plan.
- The Prime Minister has set out that the way the government is delivering on its mission to achieve a low tax, high wage, high growth economy is to change.
- The legislated increase in the Corporation Tax rate from April 2023 will go ahead, with most small businesses benefitting from the new small profits rate.
- Chancellor Jeremy Hunt will deliver the Medium-Term Fiscal Plan on 31 October, detailing action to get debt falling as a percentage of GDP over the medium term.
The decision has been taken in recognition of the need to ensure the UK’s economic stability and reassure markets of its commitment to fiscal discipline, after elements of September’s Growth Plan went further and faster than markets were expecting.
The Prime Minister has set out that the government is prepared to do whatever is necessary to ensure debt is falling as a share of the economy in the medium term and to ensure that taxpayers’ money is well spent, putting public finances on a sustainable footing.
The previously announced small profits rate of Corporation Tax will be maintained. Smaller or less profitable businesses will not pay the full 25% rate, and companies with less than £50,000 of profit – the large majority – will not see any increase at all, continuing to pay Corporation Tax at 19%.
The UK’s corporate tax regime will remain competitive and supportive of growth at the 25% rate, continuing to be the lowest rate in the G7. As part of the forthcoming tax review, the government will look at how the tax system can go further to promote growth and investment.
The government is committed to growing the economy and taking forward supply-side reforms that will ignite strong and sustained growth that delivers prosperity for the UK.
Chancellor of the Exchequer Jeremy Hunt will set out the government’s Medium-Term Fiscal Plan on 31 October, alongside a full forecast from the independent Office for Budget Responsibility.
- The around £18 billion raised per year through an increase in the Corporation Tax rate to 25% is an approximate figure. The OBR will assess the fiscal impact of the change on 31 October.
- The Chancellor will confirm the position on the Bank Surcharge in the Medium-Term Fiscal Plan.
Prime Minister Liz Truss’s opening remarks at today’s press conference – 14th Oct 2022
Good afternoon,
My conviction that this country needs to go for growth is rooted in my personal experience. I know what it’s like to grow up somewhere that isn’t feeling the benefits of growth. I saw what that meant and I am not prepared to accept that for our country.
I want a country where people can get good jobs, new businesses can set up and families can afford an even better life. That’s why from day one I’ve been ambitious for growth. Since the 2008 financial crisis, the potential of this great country has been held back by persistently weak growth.
I want to deliver a low tax, high wage, high growth economy. It’s what I was elected by my party to do. That mission remains. People across this country rightly want stability. That is why we acted to support businesses and households with their energy costs this winter. It’s also the case that global economic conditions are worsening due to the continuation of Putin’s appalling war in Ukraine. And on top of this, debt was amassed helping people through the Covid pandemic.
But it is clear that parts of our mini budget went further and faster than markets were expecting. So the way we are delivering our mission right now has to change. We need to act now to reassure the markets of our fiscal discipline. I have therefore decided to keep the increase in corporation tax that was planned by the previous government.
This will raise £18 billion per year. It will act as a down-payment on our full Medium-Term Fiscal Plan which will be accompanied by a forecast from the independent OBR. We will do whatever is necessary to ensure debt is falling as a share of the economy in the medium term. We will control the size of the state to ensure that taxpayers’ money is always well spent. Our public sector will become more efficient to deliver world-class services for the British people. And spending will grow less rapidly than previously planned.
I met the former Chancellor earlier today. I was incredibly sorry to lose him. He is a great friend and he shares my vision to set this country on the path to growth. Today I have asked Jeremy Hunt to become the new Chancellor. He is one of the most experienced and widely respected government ministers and parliamentarians. And he shares my convictions and ambitions for our country. He will deliver the Medium-Term Fiscal Plan at the end of this month. He will see through the support we are providing to help families and businesses including our Energy Price Guarantee that’s protecting people from higher energy bills this winter. And he will drive our mission to go for growth, including taking forward the supply side reforms that our country needs.
We owe it to the next generation to improve our economic performance to deliver higher wages, new jobs and better public services, and to ease the burden of debt. I have acted decisively today because my priority is ensuring our country’s economic stability.
As Prime Minister, I will always act in the national interest. This is always my first consideration. I want to be honest, this is difficult. But we will get through this storm. And we will deliver the strong and sustained growth that can transform the prosperity of our country for generations to come.
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