Budget 2015 – Corporation tax to fall to 18% by 2020 as Chancellor says Britain is open for business
Britain’s corporation tax rate will fall to 19% in 2017 and 18% by 2020
Corporation tax in Britain will fall to 18% by 2020 in a move which Chancellor George Osborne claims will send out a message that Britain is open for business.
Mr Osborne made the announcement in his first Budget since the General Election in May.
The Chancellor also said he would broaden the base for corporation tax by removing, for future transactions only, the annual deduction for acquired reputational value.
Mr Osborne said: “For big companies with profit over £20m a year, we will bring forward corporation tax payments dates – so tax is paid closer to the point at which profits are earned.
“Britain’s corporation tax rate will fall to 19% in 2017 and 18% by 2020.
“We’re giving businesses the lower taxes they can count on, to grow with confidence, invest with confidence and create jobs with confidence.
“A new 18% rate of corporation tax – sending out loud and clear the message around the world: Britain is open for business.”
WalesOnline columnist Professor Dylan Jones Evans welcomed the news and tweeted:
Stella Amiss, international tax partner at PwC, said: “This is a bold and surprise move. Business weren’t calling for a further rate reduction, and it’s expensive – £6.6bn over five years.
“But it sends a clear signal that the Government is pro tax competition and this message may be helpful in attracting overseas business to UK shores.
“The anti-avoidance measures for corporates were relatively piecemeal. Tinkering around the edges rather than making a big difference.”
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‘This was a barnstorming budget’
Howard Sears, managing director of the venture capital firm, Astuta said:”For British business, this was a frankly barnstorming budget.
“Confidence among UK businesses is already strong but these latest reductions in corporation tax will supercharge it.
“As well as sending out an important message to UK business owners, the reduction in corporation tax will give them a strong competitive edge and the all-important breathing space to grow.
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“Importantly, the corporation tax a country charges is integral to the due diligence companies undertake when deciding where to set up or expand. Again, this will make the UK more attractive as a global business hub.
“The Government’s ongoing clampdown on non-doms will be welcomed by many but if it disincentivizes internationally mobile entrepreneurs, it could have an adverse effect over the longer term.
“A balance has to be struck between taxing people at the right level and keeping the UK attractive to entrepreneurs from around the world, although the attractive corporation tax cuts will go some way to mitigate this.”
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The Institute of Directors also took to Twitter to have its say on corporation tax changes and wrote:
Jamie Morrison, private client partner at the chartered accountants HW Fisher & Company, said the changes to corporation tax show Britain is open for business but as a corporate tax haven.
‘Today’s Budget echoes the change that Gordon Brown introduced in his first Budget, back in 1997′
Karen Kirkwood, tax partner at EY in the South West, said businesses were left with mixed messages from today’s Budget.
She said: “The promise of cuts in corporation tax rate from 2017/18 was tempered by large business being the biggest funder of the Chancellors’ budget through the requirement to pay taxes 3 months earlier.
“This measure alone gave the Chancellor almost £4.5bn in 2017-18 and echoes the change that Gordon Brown introduced in his first Budget, back in 1997.
“On a positive note, this cash flow raid also allowed the Chancellor to fund the rise in the Annual Investment Allowance to £200,000.”
CBI director general John Cridland said Mr Osborne had delivered a doubled edged budget for business.
He said: “The further reduction in corporation tax is a welcome surprise but tax reductions for employers don’t appear to match the businesses most affected by a rise to £7.20 in the National Minimum Wage next April – a 7% increase.”
Stephen Williams, founding and senior partner at Newport-based accountancy specialists Kilsby & Williams, said: “One of the most welcome and surprising moves in George Osborne’s Summer Budget is the reduction in corporation tax to 19% in 2017 with a further reduction to 18% by 2020.
“This will benefit many local businesses and should make the UK a highly attractive location for foreign investment.”
