Chancellor pledges to cut corporation tax to 15%
George Osborne has announced plans to cut the rate of corporation tax in a bid to help Britain survive the economic shock after Brexit. The Chancellor has pledged to reduce the rate of corporation tax to 15%, to encourage businesses to continue investing in the UK, following the EU referendum vote.
Mr Osborne had previously threatened tax increases and spending cuts through an emergency Budget if Britain voted to leave, but he has now said he will wait for official forecasts before announcing any further new measures. The Chancellor confirmed there would be no emergency Budget until the new Prime Minister is in place, so further tax announcements are not expected until the autumn. Although, increases to income tax rates are widely predicted to feature at this point.
The Chancellor has already abandoned his long held target to restore government finances to a surplus by 2020, and it now appears his strategy is to attract new investment and court business, which might otherwise have been put off by the uncertainty surrounding the country’s relationship with the EU.
Despite the Remain side’s defeat, The Chancellor said he wanted a leading role in shaping Britain’s new economic destiny, and that the tax cut was part of his plans to build a ‘super-competitive economy’. Beside the tax cut, he said his five point plan also included;
- Focusing on a new push for investment from China
- Ensuring support for bank lending
- Redoubling efforts to invest in the Northern Powerhouse
- Maintaining the UK’s fiscal credibility
In his Budget in March, the Chancellor announced the corporation tax rate would fall from the current rate of 20% to 17% by 2020, but his latest announcement will reduce the rate to 15%, taking the UK close to Northern Ireland’s planned corporation tax rate of 12.5% from 2018, and giving the UK the lowest corporation tax rate of any major economy.
Article written by Donna McCreadie