UK will be G20's least taxing nation, firms told
A cut in corporation tax looks set to be Autumn Statement 2016’s most surprising and contractor-friendly announcement.
In a speech to business leaders ahead of the statement tomorrow, Theresa May implied the rate of tax that companies pay on profits will fall to its lowest ever.
“My aim is not simply for the UK to have the lowest corporate tax rate in the G20, but also a tax system that is profoundly pro-innovation,” the prime minister said, addressing the CBI.
Although her pledge is worded in such a way that Philip Hammond, the chancellor, could still leave corporation tax at 20%, ahead of its scheduled fall to 17% by 2020, inaction is unlikely.
In fact, by then, the lowest rate in the G20 would be a comparatively far off 12.5% -- a rate already offered by the Republic of Ireland, and due to be matched by Northern Ireland.
However, Mrs May’s untimetabled pledge to transform the UK into the G20’s least taxing nation for companies does appear to go against the preference of No 11 Downing Street.
Moving in October to distance himself from his predecessor’s pledge to cut corporation tax to 15%, Mr Hammond called 20% “highly competitive” and 17% even “more attractive still.”
His imminent Autumn Statement was outlined yesterday by the PM. “He will commit to…bringing the deficit down and getting our debt falling so that we can live within our means once again.
“He will build on the actions that our independent Bank of England has already taken to support our economy. And he will… invest in our nation’s infrastructure”, Mrs May said.
The chancellor also heard that he will “do everything possible” tomorrow to “make the UK outside the EU the most attractive place for businesses to grow and invest.”
Measures to help achieve this, added Mrs May, include an extra £2billion a year in R&D; a new fund to back scientific R&D and a review of the Small Business Research Initiative.
Nonetheless the IoD welcomed Mrs May speech, complimenting as “reassuring”. But it also said company directors still have cause to look at the AS tomorrow, at least for elaboration.
“[We will] be pleased to get more information on the government’s industrial strategy, particularly the prime minister’s statement that they do not aim to prop up failing companies.”
The institute was referring to Mrs May saying the industrial strategy will be about tackling “long term, structural challenges”; rather than “propping up failing industries or picking winners.”