FURTHER CORPORATION TAX CUTS and reliefs for cutting-edge tech businesses have been pledged by prime minister Theresa May, ahead of Wednesday’s Autumn Statement.
In a speech today at the CBI, May has outlined a plan to lower corporation tax to 15% and beyond (with a 20% to 17% cut by 2020 already pledged), and a £2bn investment into science and technology that includes using the tax system to provide incentives.
May had previously hinted at further cuts to corporation tax to placate business leaders and to keep the UK status of having the lowest corporation tax rate among the G20 group of countries. Yet the corporation tax may fall further since the newly elected president Donald Trump suggested cutting US federation tax from 35% to 15%.
“We will also review the support we give innovative firms through the tax system, because my aim is not simply for the UK to have the lowest corporate tax rate in the G20, but also one that is profoundly pro-innovation,” she said.
Chancellor Philip Hammond will find extra funds for infrastructure projects such as roads, bridges and railways, it is believed, to be announced in the Autumn Statement. However he is also under pressure to find extra funds for the NHS and social care, which will be an issue with stunted GDP growth. Helping families “share” in Britain’s prosperity would be key, Hammond said on the BBC yesterday.
These will be tough asks, particularly if looking to keep year-on-year budgets balanced, but there are suggestions he will – in the short-term – look to loosen the purse-strings.
James Hender, partner and head of private wealth at Saffery Champness, commented: “Mr Hammond’s goal will likely be to lay the foundations for post-Brexit building rather than balancing the books.”
Little wriggle room
The lack of growth in the economy will cut the projections for the tax income, but most easy spending cuts have been made so the chancellor may have to raise borrowing.
Michelle Quest, head of tax, KPMG UK, said: “Commentators and the markets alike are waiting with bated breath for the chancellor to spell out the direction of the country’s fiscal policy and put in place measures that will help the UK economy to seize the opportunities and cope with the turbulence of Brexit.”
Quest continued: “With ‘Brexit uncertainty’ now likely to be with us for some time, coupled with the current geo-political volatility, it is even more crucial that business sees a firmer commitment from the Government to a clearly defined path of future tax changes.”
KPMG‘s surveys of clients have consistently determined that companies look for stability, predictability and certainty, both in economic (including tax) and political terms.
In a speech to the CBI, May will outline a new scientific research fund that will back areas such as robotics and biotechnology and help commercialise new discoveries. The investment will help put post-Brexit Britain at the “cutting edge” of technology.
“Britain has firms and researchers leading in some of the most exciting fields of human discovery. We need to back them and turn research strengths into commercial success. This is about stepping up, not stepping back,” she said.
May has previously called for workers to be put on the boards of major firms, however this has now been scrapped.
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