Osborne to cut corporation tax to below 15%

Chancellor George Osborne plans to cut corporation tax to ensure businesses keep investing in the UK after it opted to leave the European Union.

Osborne told the Financial Times he would cut the tax rate to below 15% from the current 20%, which would make it the lowest of any major economy.

He said the move was part of his new five-point plan to build a "super-competitive economy" with low tax rates and said it was important for Britain to "get on with it" to show investors it was still "open for business".

“We must focus on the horizon and the journey ahead and make the most of the hand we’ve been dealt,” Osborne told the FT in an interview.

Ireland currently has a corporation tax rate of 12.5% that has attracted big international companies such as Google to register their offices there.

Aside from the corporate tax cut, Osborne said his plan included focusing on a new push for investment from China; ensuring support for bank lending; redoubling efforts to invest in the Northern powerhouse; and maintaining the UK’s fiscal credibility.

The chancellor told the FT that Britain was facing a “very challenging time” and called on the Bank of England to do what it can to avoid “a contraction of credit in the economy”.

Lee Hopley, chief economist at manufacturers' organisation EEF, said: “The chancellor is right to focus on action that will anchor investment in the UK – this is critical at a time of economic uncertainty.

“The five priorities the Chancellor has set out – including lower Corporation Tax, forging ahead with investment in the North and ensuring support for bank lending – are welcome, but must be the first steps in many. Forecasters are pointing to significant risks to business investment in the next few years, so it is vital that the Treasury works closely with industry to identify other blockages that will need to be tackled. This includes keeping the R&D tax credit competitive, including plant and machinery in business rates calculations, boosting the Annual Investment Allowance for smaller companies and delaying the apprenticeship levy, amongst others.”