Business reeling from £32bn tax bombshell as Hunt battles to balance the books

Businesses face a £32bn tax bomb in April as Jeremy Hunt battles to balance the books.

The Chancellor launched a new multi-billion pound raid on businesses and entrepreneurs in a move critics say was un-Tory and left them taxed ‘into the ground’.

He said the brutal tax hikes were needed to bring borrowing – which will reach £177bn this year – back under control.

The energy sector took the brunt of the brunt after he increased the windfall tax for oil and gas producers from 25 percent to 35 percent and extended it until 2028.

This brings the total tax rate for companies in the North Sea to 75 percent.

Hunt also targeted renewable electricity generators for the first time with a windfall tax of 45 percent, targeting the excess profits companies have made since gas and electricity prices soared.

The combined measures will bring in nearly £15bn next year, with Hunt saying he has ‘no objection to windfalls when it comes to windfalls’.

The charges come on top of a corporate tax increase from 19 percent to 25 percent in April, raising £11.7 billion next year.

But the sting in the tail was Hunt’s decision to freeze the threshold at which employers start paying social insurance, which will raise £3.1bn next year.

“Businesses should pay their fair share,” the Treasury said. But Amanda Tickel, Deloitte’s chief tax officer, described the national insurance raid as “a surprising and significant additional tax burden.”

The measures, which came with dividend and capital gains tax increases, sparked outrage among business leaders who warned they could stifle growth.

The measures are expected to harm investment and force entrepreneurs to lay off staff.

Over the next five years, the corporate tax increase will raise more than £80bn, while the national insurance raid will cost companies more than £25bn

Entrepreneur Luke Johnson said: “Companies have been driven into the ground. This is a mess and doesn’t feel like a Tory government. We have become too accustomed to spending and growing the state.

‘If you are a starting entrepreneur, would you do it if the costs of hiring people are so high?

There will be layoffs due to the freeze of national insurance and the increase in the minimum wage. Companies are closing.’ The Chancellor also introduced changes to capital gains tax and dividend tax.

Meanwhile, Kwasi Kwarteng’s plans to withdraw changes to the IR35 payroll rules, which would force many former self-employed people to be treated as employees by companies seeking to use their services, have also been brushed aside, leaving £1.1 next year billion is raised.

Hunt has also revised research and development tax credits for small businesses in a series of tax increases that will bring a total of £32bn extra next year.

Over the next five years, the corporate tax increase will bring in more than £80bn, while the National Insurance raid will cost companies more than £25bn.

Martin McTague, national president of the Federation of Small Businesses, warned that the budget had “a lot of focus on creating inconspicuousness and little on creating wealth.”

He added: “Small businesses now face even higher taxes, cuts to innovation and a recipe for a longer and deeper recession.”