UK Plans to Cut Corporation Tax
George Osbourne has put UK corporation tax at the heart of the Brexit recovery plan after pledging to slash the current rate.
In an effort to show that the UK is still “open for business” Mr Osbourne has pledged to slash UK corporation tax as part of his plan to create a “super competitive economy” in the wake of the vote for Brexit. In an interview with the Financial Times, Mr Osbourne outlined his new five-point plan to galvanise the economy. While the chancellor did not backtrack on his warning that leaving the EU could push the country into recession, he told the Financial Times: “We must focus on the horizon and the journey ahead and make the most of the hand we’ve been dealt.”
In his first interview since Britain voted to leave the EU, Mr Osborne said he wanted a leading role in shaping Britain’s new economic destiny, laying out plans to build a “super competitive economy” with low business taxes and a global focus.
A cut in the corporation tax rate from 20% to a rate closer to Irelands 12.5% would give the UK the lowest corporation tax rate of any major economy. Such a change could accelerate the “race to the bottom” on corporation tax rates among EU nations and potentially give the UK a tax haven status.
Jonathan Isaby, chief executive of the TaxPayers' Alliance, said: "The Chancellor is absolutely right to be considering a big cut to corporation tax, as it would show that the UK is ready to seize new opportunities in the global economy.
"But Mr Osborne must be bold and cut the rate to 10 per cent as soon as possible to really demonstrate that we are open for business, with competitive conditions to match our talented workforce. It's crucial that our politicians have a positive vision for British taxpayers outside the EU, and meaningful tax cuts to boost growth and prosperity are an excellent first step."
Osbourne’s Five Point Plan
Besides the tax cut, the chancellor said his five-point plan included focusing on a new push for investment from China, ensuring support for bank lending, redoubling efforts to invest in the Northern powerhouse and maintaining the UK’s fiscal credibility.
Before the referendum, Mr Osborne had threatened to make £30bn of tax rises or spending cuts in a post-Brexit emergency Budget. He is now striking a more cautious note, awaiting official forecasts before announcing any new measures in the Autumn Statement.
The chancellor accepted that Britain faced a “very challenging time” and urged the Bank of England to use its powers to avoid “a contraction of credit in the economy”, reminiscent of the squeeze during the height of the financial crisis in 2008. Mr Osborne said Britain would also aggressively seek new bilateral trade deals and that he would lead an extended visit to China this year, in an attempt to keep inward investment flows.
On the public finances, Mr Osborne promised to “maintain the consolidation that we put in place last year” and said a review of the structural damage caused by Brexit would be conducted in the autumn. Last week the chancellor dropped his target of a 2020 budget surplus, as the Treasury focus shifted away from austerity to policies to stop the shock of Brexit turning into a severe recession.
Mr Osborne said whoever becomes prime minister should seek maximum access to the EU single market for Britain’s goods, services and financial services, but conceded that it could be curtailed by the fact that voters in last month’s referendum also want restrictions on EU migration.
If you are looking for a change in your career in tax or would like to speak to Kingpin International on what we can do for you then please get in touch with a member of our leadership. Alternatively, view our current vacancies and accelerate your tax career today.