Report: UK's Sunak to raise business tax

Corporation tax set to rise from 19 pence to 23 pence in the pound

Britain's Chancellor of the Exchequer Rishi Sunak at Downing Street. Reuters

British Chancellor of the Exchequer Rishi Sunak is set to increase a tax on business to pay for an extension to Covid-19 support schemes in the budget next month, The Sunday Times reported.

Mr Sunak, in his Budget speech on March 3, will announce he is increasing corporation tax from 19 pence to 23 pence gradually by the next general election, the report said.

The move will raise an expected £12 billion ($16.8bn) a year, the report said.

At least 1 per cent is set to be added from this autumn, at a cost to business of £3 billion, with further rises in subsequent years.

Allies of Mr Sunak said he would not increase corporation tax higher than 23 per cent.

These measures will to pay for an extension to the furlough scheme, VAT cuts and business support loans until at least August.

Mr Sunak is expected to defer most of the toughest decisions on paying for that support in his budget speech.

"The corporation tax hike will be higher than expected and the extension of the support schemes will be longer than most people expect," a source told the paper.

Insiders said the stamp duty holiday on property purchases would also be extended, along with the other coronavirus support measures, the report said.

Britain's economy had its biggest slump in 300 years in 2020, when it contracted by 10 per cent, and will shrink by 4 per cent in the first three months of 2021, the Bank of England predicts.