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Emergency Budget: Corporation tax to be cut

Simon Quicke

Corporation tax is to be cut to make the UK a more compeitive environment for businesses and credit will be made more readily available to support a private sector recovery.

Speaking in his emergency Budget the Chancellor George Osborne said that it would cut corporation tax from the current level of 28% to 24% over the next four years.

However what he gave with one hand he took away with the other announcing an increase in VAT from 17.5% to 20% from 4 January next year, a measure that will create great tensions in the coalition government.

With corporation tax there will be a 1% cut in four successive years and Osborne said that he wanted to put a sign up over the UK saying the country was open for business and had some of the most competitive rates in Europe.

"A genuine and long lasting economic recovery must have its foundation in the private sector," he said.

He said that it would launch a five year plan to reform the corporation taxes to make things simpler and set the foundations for the private sector recovery and to "rebalance the economy away from household debt and government consumption".

He said that it also wanted to make life easier for businesses by lifting the National Insurance threshold and by making the cost of employing low paid staff less than before.

On the credit front, Osborne said that it would extend the enterprise finance access scheme that would benefit up to 4,000 firms and there would be further announcements from the Business Secretary later this autumn about making sure credit was available to "make sure the recovery is properly financed".


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