Corporation tax will be cut from 50 per cent to 20 per cent in two weeks’ time, George Osborne has announced.
In his “no-gimmicks Budget”, the chancellor said this would mean the UK would have one of the lowest rates of corporation tax of any major economy in the world.
He told a rowdy House of Commons: “You cannot create jobs without successful business. As well as the right infrastructure, businesses also need low, competitive taxes.
“There are those here who are committed to putting the rate of corporation tax up.
“They should know that this would be the first increase in this tax rate since 1973, and a job-destroying and retrograde step for this country to take.”
This move will mean that there will be no country in the G20 with a lower rate of corporation tax than the UK, whose rate will be at the same level as Russia, Saudi Arabia and Turkey.
Mr Osborne added that the government would be making compensation payments non-deductible for corporation tax purposes through legislation in a future Finance Bill.
Banks can no longer deduct from corporation tax any compensation paid to customers for mis-sold products.
There were several corporation tax reliefs, including a 25 per cent relief for orchestras.
Sue Moore, technical manager for private client at the Institute of Chartered Accountants in England and Wales said: “Bringing corporation tax down was one of the government’s targets when it came to power, but it has come in a year earlier than planned.
“Having one rate makes it simpler and commercially it is attractive for businesses to establish themselves in the UK.”