With the UK primed to make new tax deals post-Brexit, having a Corporation Tax rate that is too low, can prevent the country making new friends says Genevieve Morris, partner and Head of Corporate Tax and Blick Rothenberg.
“It may have come as a surprise to some that the Prime Minister has announced the postponement of the ‘long awaited’ 2% Corporation Tax cut to 17% with effect next April. But really it shouldn’t have been a surprise at all.
“With the UK primed to cut new trade deals post-Brexit, the PM has realised that having a Corporation Tax rate that is too low, can prevent you making new friends. At 19% (the current rate of corporation tax) it’s still one of the lowest in the G20, and the lowest in the G7 – notably lower than the US and China.”
She added, “Moreover, the reduction to 17% hasn’t been ‘long awaited’ by any business, I don’t think they really care. Business leaders know that at 19% the UK is a hugely attractive place to do business. Inward investment and start-up activity remains strong and delaying or abolishing the reduction to 17% isn’t going to damage the UK’s reputation as a great place to do business.”
Genevieve said, “The Government need to raise money, and the key way to do this is by raising taxes. Rather than adding a penny or two on the basic rate of Income Tax, which leaves the squeezed middle-income families suffering, defer the tax give-away that no one really wants or needs.”
“It’s a bold but good move by the PM – Corporation Tax rates have fallen from 28% ten years ago to 19% today. The move to cut Corporation Tax rates when the Conservatives came to power was a great boost to business, and I think we all realise now that they’ve reached a rate that is the perfect balance between raising revenue and encouraging inward investment and entrepreneurs.”
She added, “After all, what’s 2% between friends?”
For more information, please contact Genevieve Morris.