Kwasi Kwarteng has scrapped the formerly announced six percentage point hike in corporation tax, with the Government eager to lower the cost of doing business to boost growth and productivity.
He announced to the House of Commons in his mini-budget today that the planned increase in corporation tax from 19 per cent to 25 per cent will be cancelled – ensuring the country still has the lowest level of corporation tax in the G20.
The Chancellor forecast £19bn would flow back into the economy from maintaining the lower rates.
He said: “That’s £19bn for businesses to reinvest, create jobs, raise wages, or pay the dividends that support our pensions.”
The hike in corporation taxes was announced by former chancellor Rishi Sunak – and had been highly divisive among MPs within the Tory party.
He also announced the Government automatically sunset EU regulations by December 2023 – requiring departments to review, replace or repeal retained EU law.
Kwarteng said: “This will reduce burdens on business, improve growth, and restore the primacy of UK legislation.”
Kwarteng aims for nation on entrepreneurs
Alongside the headline moves, Kwarteng announced multiple technical adjustments across the breadth of Government.
Firstly, he confirmed the winding down of the Office for Tax Simplification – putting more emphasis on tax officials to work on simplifying the code.
He said: “Instead of a single arms-length body which is separate from the Treasury and HMRC, we need to embed tax simplification into the heart of Government. That is why I have decided to wind down the Office of Tax Simplification, and mandated every one of my tax officials to focus on simplifying our tax code.”
Kwarteng also revealed several adjustments to policies designed to encourage private investment.
This included keeping the threshold for Annual Investment Allowance at £1m, rather than falling back to £200,000 as planned.
The allowance gives 100 per cent tax relief on investments in plant and machinery.
He also committed to extending the Enterprise Investment Scheme and the Venture Capital Trusts beyond 2025.
Kwarteng further announced his intention to increase the limits for the Seed Enterprise Investment Scheme and Company Share Option Plans.
He described the moves as “crucial steps on the road to making this a nation of entrepreneurs.”