Corporation tax rate cut

Britain’s chancellor of the exchequer George Osborne is to cut the rate of corporation tax to encourage businesses to locate in Britain and spur growth.

From April, the rate will fall to 24% from 26%, double the cut previously planned. Reductions in each of the next two years will bring it to 22% in 2014 instead of 23%, Mr Osborne said in his budget statement to parliament in London yesterday.

Banks will see the levy charged on their balance sheets rise to 0.105% from 0.088% to offset the benefit.

“The headline rate of corporation tax remains the most visible sign of how competitive our country is,” he told MPs. “A headline rate that is not just lower than our competitors, but dramatically lower. And a rate that puts our country within sight of a 20% rate of business tax that would align basic rate income tax, the small companies rate and the corporation tax rate.”

It comes a month after US president Barack Obama said he wants to cut the US levy to 28% from 35%. The Institute of Directors welcomed the move and said Mr Osborne should aim for a 15% rate.

Bloomberg