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Tax Tax

Protect the reduction of Corporation Tax to 17%

Last updated: 11:01pm 9 January 2019

Corporation Tax is due to fall to seventeen per cent by 2020 – the lowest rate of any developed economy – and we will stick to that plan, because it will help to bring huge investment and many thousands of jobs to the UK.

Conservative Party Manifesto 2017, p.14

Our verdict

Business pay corporation tax on profits. Currently in the UK the rate is set to 19%. In 2016, during their previous term of office, the government committed to reduce the Corporation Tax rate to 17%. The change is going to be effective from the 1st April 2020, as confirmed in the Finance Act 2016 (a compilation of the finance legislation enacted by the government). This promise is to “protect” this planned change.

By reducing the tax to 17% the government aims to “provide the right conditions for business investment and growth”. Essentially, the government hopes that the lower tax rate will encourage corporations to invest in the UK, keep their profits in the UK, and, in the long run, increase GDP.

As with other policies to ‘continue’ doing something (in this case, not make changes to the planned drop in corporation tax) we are marking this as ‘done’. Assuming nothing changes for the rest of this government’s term of office, which could run beyond the introduction of the new rate, this policy will remain as ‘done’. However, if the new rate is delayed or scrapped, this policy will be changed to ‘broken’. Depending on the Brexit outcome anything is possible, so follow this policy for details.

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