Osborne vows to cut corporation tax to 15%

George Osborne has pledged to cut corporation tax to 15 per cent in a move designed to give Britain a post-Brexit boost.

Cutting the rate of tax firms pay by 5% would hoist the “open for business” sign over the UK, the chancellor told the Financial Times in his first interview since the vote to leave the EU.  

The cut would be one of five things Mr Osborne says the UK must do to galvanise the economy, which he said he wants to play a leading role in shaping as it heads to a Brexit.

But he also told the FT that the government should “get on with it;” refrain from “moping around and trying to unpick” the Brexit decision and should “make the most of the hand we’ve been dealt.”

If he gets his way, the chancellor would give the UK the lowest corporate tax rate of any major economy, but the rate would still be undercut by Ireland where it is 12.5 per cent.

The Taxpayers’ Alliance welcomed Mr Osborne’s pledge to slash the current 20 per cent tax rate for small firms, but indicated he should go further by not allowing Ireland to compete.

“The chancellor is absolutely right to be considering a big cut to corporation tax…but Mr Osborne must be bold and cut the rate to 10%,” the Alliance said.

The Labour shadow chancellor John McDonnell was much less enthused. "This is a futile and costly gesture from a lame-duck chancellor who is clean out of ideas," he said.

“Instead of turning the whole country into a giant tax haven and playground for the ultra-rich, the chancellor needs to get a grip on the real problems by reversing planned cuts to government investment and bringing forward shovel-ready projects for those areas worst affected by the investment slump and the shock of Brexit.”

But Jonathan Isaby, the chief executive of the Taxpayers’ Alliance, wants the government to make the reduction to corporation tax “as soon as possible.”

“It's crucial that our politicians have a positive vision for British taxpayers outside the EU, and meaningful tax cuts to boost growth and prosperity are an excellent first step,” he said.

As to when the tax cut might be made, Mr Osborne's published interview does not cite a timeframe although he did reportedly say a review of the fiscal damage caused by the Brexit vote would run in the autumn.

However contractor accountancy firm Brookson has suggested that a new chancellor could have replaced Mr Osborne by then, who is understood to be eying the Foreign Office if he is moved on from the Treasury.

“The Autumn Statement 2016 will now become more important for the country as potentially new chancellor steps forward,” the accountancy firm said.

“This perhaps allows a small amount of time for the dust to settle before the policy makers (or policy changers) start to scope out next steps.”

The firm called on the government to ensure the UK’s withdrawal from Europe is managed “as smoothly as possible,” with as much “political clarity and coordinated action as possible.”.