BUSINESSES received a welcome cut to their tax bill yesterday as the Treasury accelerated its reduction in corporation tax for the second time in a year.
The chancellor cut the tax to 24 per cent from April, one per cent lower than the 25 per cent it had been due to fall to in his original spending review.
The measure will cost the Exchequer £3.76bn, making it one of the most expensive tax cuts in the Budget, but George Osborne said his aim was to signal that Britain is “open for business”.
“The headline rate of corporation tax remains the most visible sign of how competitive our country is,” he said. “[This is] the biggest sustained reduction in business tax rates for a generation.”
Mark Littlewood, head of the Institute of Economic Affairs said that Osborne should be “commended” for the cut, saying it would “encourage enterprise, stimulate growth and reward work”.
In 2014, corporation tax will be 22 per cent, which Osborne emphasised is 18 per cent lower than in the US and eight per cent lower than in Germany.