The planned rise in corporation tax has been scrapped at this morning’s mini-Budget.
Speaking to the House of Commons this morning (September 23), Chancellor Kwasi Kwarteng said the tax, due to rise to 25 per cent next year, will no longer take place.
Corporation tax will therefore remain at 19 per cent, which the chancellor said will push £19bn back into the economy.
“We believe that high taxes reduce incentive to work, deter investment, and hinder enterprise,” he said.
Kwarteng hinted at further tax changes to come, saying: “We will review the tax system to make it simpler, more dynamic, and make it fairer for families.”
Corporate tax partner at accountancy firm HW Fisher, Toby Ryland, said businesses across the UK will be celebrating the news.
"[This will] help to maintain the UK’s status as a low tax jurisdiction and keep it as an attractive option for overseas investors - with the lowest corporation tax in the G20.
“However - is this a decision to level up or level out? Don’t forget that these changes will need to be funded from somewhere - watch out for further detail elsewhere.”
The 2016 budget announced corporation tax in 2020 will be reduced to 17 per cent, however before the pandemic it was announced that it will be held at 19 per cent.
Former chancellor Rishi Sunak had pledged to increase corporation tax from 19 to 25 per cent from 2023 when he was chancellor.
Business leaders have hit out at the potential rise, saying it is a tax levied on profits at a time when many companies are facing recession.
sally.hickey@ft.com
