UK budget: visa easing now, tax tightening later

Changes in the UK's points-based immigration system, which only came into effect at the beginning of January, have been unveiled by Chancellor of the Exchequer Rishi Sunak in his Budget speech on Wednesday.

The visa system will be reformed to allow highly skilled migrants in the fields of science, research and tech to enter the country without the need to obtain a sponsor he announced.Mr Sunak also promised a simplified system for entrepreneurs to establish themselves in the country as part of a drive to establish the UK as a "scientific superpower".The spectre and, more importantly, the cost of the Covid-19 pandemic dominated the Budget announcements. Unprecedented financial support for businesses and jobs will result in record peacetime borrowing of £355 billion in the current financial year and will total an estimated £234 billion in 2021-22.“The amount we’ve borrowed is only comparable with the amount we borrowed during the two world wars,” he said. “It is going to be the work of many governments, over many decades, to pay it back.”In a bid to begin to claw some of this back, Mr Sunak said that, from April 23, Corporation Tax would increase from the current 19 per cent to 25 per cent, which he added would still be the lowest in the G7.However, the new rate will only apply to the company profits of ten per cent of the nation's largest firms with the rate for smaller companies, with annual profits below £50,000, remaining at 19 per cent.Additionally, the government is to freeze income tax thresholds for four years until April 2026, which will result in many more of the lower paid being brought into the lowest, 20 per cent tax bracket, while thousands of others stand to be sucked into the higher 40 per cent tax band.Mr Sunak made it clear, however, that government support for businesses because of the pandemic would continue for the immediate future, announcing that the existing furlough scheme, scheduled to end in June, would continued to the end of September. But from July 1, employers will have to contribute 10 per cent towards the costs, rising to 20 per cent from August 1.The reduced VAT of five per cent (instead of 20 per cent) for the hospitality and tourism sector will be extended for six months to the end of September, when it will increase to 12 per cent and will not return to the full standard rate until April next year.
To encourage an investment-led recovery, the chancellor said that, from April, a new "super-deduction" would be in force for two years and would cut companies’ tax bills by 25p for every pound invested in new equipment.He also announced the creation of eight new English freeports to be based in East Midlands Airport, Felixstowe & Harwich, Humber, Liverpool City Region, Plymouth, Solent, Thames and Teesside.Additionally, in a bid to achieve the government's aim of 'levelling up' opportunities across the country, rather than being focused on London and SE England, he announced a Treasury 'campus' with 750 employees would be established in Darlington and a new green infrastructure bank, with initial funding of £12 billion, in Leeds.Also, the £375 million UK-wide ‘Future Fund: Breakthrough’ will invest in highly innovative companies - such as those working in life sciences, quantum computing, or clean tech - which are aiming to raise at least £20 million of funding. 

Read more news and views from David Sapsted.

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