© Aaron ChownRishi Sunak outside 11 Downing Street before heading to the House of Commons to deliver his Budget (Aaron Chown/PA)
Rishi Sunak set out plans to freeze income tax thresholds and increase corporation tax as he began the process of repairing the nation's finances following the coronavirus crisis.
The Chancellor used his Budget to set out a £65 billion spending package this year and next year to support the economy as it recovers from the pandemic.
But he warned that the unprecedented spending could not continue and he had to be "honest" about putting the nation's finances back on a sustainable footing.
The point at which people begin paying income tax will increase to £12,570 in April but will be maintained at that level until April 2026, meaning more people will be dragged into paying tax as wages increase.
The 40p rate threshold will increase to £50,270 and then be frozen.
Mr Sunak said: "Nobody's take-home pay will be less than it is now, as a result of this policy.
"But I want to be clear with all Members that this policy does remove the incremental benefit created had thresholds continued to increase with inflation."
Corporation tax will increase from 19% to 25% in 2023.
But a new "small profits rate" will maintain the 19% rate for firms with profits of £50,000 or less - meaning around 70% of companies - 1.4 million businesses - will be "completely unaffected" by the tax hike.
And there will be a taper above £50,000, so that only businesses with profits of £250,000 or greater will be taxed at the full 25% rate - around 10% of firms.
Mr Sunak said: "So yes, it's a tax rise on company profits. But only on the larger, most profitable companies. And only in two years' time."