Budget 2023: Corporation tax rises despite warning from Tory rebels about 'hammering' economy

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Jeremy Hunt faces a Conservative backbench rebellion after announcing a corporate tax hike in Wednesday's budget.

Influential right-wing MPs including Priti Patel and Simon Clarke - have warned that raising the rate from 19% to 25% will 'hammer' businesses and stunt growth.

Mr. Hunt confirmed the rise will continue from April, saying major tax cuts would only destabilize efforts to balance the books.

But the Chancellor has announced new plans to encourage investment. Its "full capital expenditure" policy will allow companies to deduct every pound invested in equipment, plant or computer machinery from profits for the next three years.

And a new credit from tax will be introduced for small and medium enterprises. medium-sized companies that devote 40% of their expenditure to research and development. Tax breaks for film, TV and video games will also be extended, he said.

However, Tory rebels have warned that companies are 'fleeing' Britain due the increase in corporate tax. "It's a tax on jobs and growth," Mr Clarke told The Telegraph.

The former Treasury Secretary, a key backer of Liz Truss, added, "It's very hard to see how this doesn't have a chilling effect on the whole economy in a way that will cost every family in the country."

Ms Patel warned that retail businesses were 'absolutely hammered' by corporation tax and said a 'capital flight' from the UK was already underway.

The former Home Secretary told The Express: 'The Conservative Party is nothing if it doesn't stand for low taxes and sound money and, above all, the ability to 'helping people do well, prosper and stand tall.'

She accused Rishi Sunak and Mr Hunt of an 'incoherent and inconsistent' approach to taxation, dismissing a 'super deduction" previously announced to encourage investment.

Speaking at the Co mmunes, Ms Patel called on the Chancellor to keep the level of corporation tax "under review". She said the investment incentives "will look attractive, but obviously the devil will be in the details".

She added: "In terms of the broader minimum tax rate prospectus about the companies... we know that the introduction of the mi...