TAX NEWS - June 2010
UK Tax: UK To Stagger Corporation Tax Cut
Speaking in the House of Lords, Lord Sassoon repeated the government's commitment to "lower, simpler and more predictable taxes." The secretary said that this month's budget would include a so-called road map to set out the government's plans to reform and reduce the tax over the lifetime of this government and to make the tax rate the most competitive of all industrial countries.
Lord Sassoon went on to stress the importance of tax and deregulation to ensure that British industry remains competitive. The secretary, who is responsible for business and financial services in the new government, emphasized that as well as a commitment to bring the UK rate of corporation tax down to the lowest in the G20 within the lifetime of this government, it would be necessary to keep a close watch on regulation and regulatory powers.
The Chancellor George Osborne had already made a pledge to cut corporation tax in a speech he made at the annual Confederation of British Industry (CBI) dinner on May 19. Though the Tory manifesto pledge to cut the tax from 28% to 25% is expected to be honoured, Lord Sassoon's comments in the House of Lords suggest that the reduction in the rate of corporation tax will take place over the next five years rather than in one hit. Details are expected in the budget statement later this month. Should the rate be cut it will result in the lowest rate of corporation tax in the UK for 45 years.
Though cutting the rate of tax by 3% would cost the Treasury GBP4.5bn per year, the Chancellor suggested that some of the loss of revenue could be recouped by taking additional measures, such as repealing tax relief schemes and tackling tax avoidance.
The CBI generally welcomed the Chancellor's remarks and Lord Sassoon's comments have reinforced the likelihood of the tax being cut when the budget is announced later this month.
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