Osborne told to cut corporation tax faster to keep UK’s vital lead

GEORGE Osborne should cut the UK’s competitive corporation tax rates further to draw major international businesses to the UK, according to accounting firm UHY Hacker Young.

The headline rate has been slashed from 28 per cent in 2010 to 24 per cent this year, and will fall even further to 20 per cent in 2015.

The changes mean a firm earning £1m this year would pay 22.7 per cent in tax, well below the average of 26 per cent across the major economies studied by UHY Hacker Young.

But the new competitive edge needs to be pressed home if the UK is to gain a long-term advantage over key rivals, the analysts claim.

“Other countries are cutting their corporate taxes too,” said Roy Maugham, a tax partner at the firm.

“If the government wants to maintain the UK’s lead, let alone extend it, it should follow up with further cuts to corporation tax.”

And the firm warned the government’s tough rhetoric against tax avoidance could make businesses think twice about coming to the UK, undoing the attraction of lower headline rates.

“Some UK politicians seem determined to alienate major global businesses like Google or eBay, with strident criticism of their tax payments,” said Maugham.