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Budget expected to include plans to repay Covid-19 outlay

22 February 2021

Next week's Budget is expected to include the announcement that corporation tax will be raised to help cover the cost of continuing support schemes to assist the UK in dealing with the Coronavirus pandemic, according to the 

The details of extended schemes will also be included in the Budget, as Chancellor Rishi Sunak sets out plans to assist the UK economy in recovering for the impact of the virus.

Official reports have shown the UK economy contracted by 10% last year and is expected to shrink by a further 4% in the first quarter of 2021.

However, the Bank of England has described the economy as a "coiled spring" with pent-up demand waiting to drive a quick recovery once lockdown restrictions are eased.

In the meantime, Mr Sunak is expected to state that corporation will rise on a gradual basis from 19p in the pound up to 23p in the pound by the time of the next General Election.

The increases are expected to raise approximately £12bn a year, said the Sunday Times report.

Costs to business is expected to amount to £3bn this year, with further rises planned for the years ahead.

Expenses have been incurred by the government for supportive schemes including furlough payments, VAT reductions and business support loans.

However, it is expected that Mr Sunak will state that corporation tax will not be increased above 23%.

Among the supportive measures included in the Budget will be an extension on property stamp duty relief and longer-than-expected assistance for businesses and individuals.

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