— HM Treasury (@hmtreasury) March 8, 2017
Yesterday’s Spring Budget 2017 saw Philip Hammond commit to lowering corporation tax to 17% in 2020, making it the lowest in the G20 – but was this a missed opportunity to introduce the lower rate sooner?
The gradual reduction in the CT rate was announced in the Summer Budget 2015, dropping the main rate from 20% to 19% this April and then to 17% in 2020 for all non-ring fence profits.
This huge drop from the high of 28% before the crash in 2008 is aimed at attracting investment, especially as Brexit looms large on the horizon. Considering that the Prime Minister Theresa May is due to trigger Article 50 this month, the CT rate-cut could have been moved to go hand-in-hand with the beginning of the UK’s exit from the European Union.
Mike Chapman, Senior Manager at Knill James Chartered Accountants commented: “Philip Hammond confirmed the intention to reduce the headline rate of corporation tax, already the lowest in the G20, to 17% from April 2020 which is clearly a carrot for headquarters companies to remain in the UK post Brexit.”
Chancellor Philip Hammond said: ‘We have an economy that has continued to confound the commentators and deficit down by over two thirds. As we prepare to exit Brexit, this Budget builds a foundation of a fairer, more global Britain.
Michelle Quest, Head of Tax at KPMG in the UK, added: “The Government is also clearly eager to maintain the mantra that the UK is open for business with the Chancellor renewing the commitment to reduce the headline corporate tax rate to 19% in April of this year (the lowest in the G20) and 17% in April 2020.”
Chris Denning, corporate and international tax partner at at top 20 firm MHA MacIntyre Hudson said: “There appears little in the Budget in terms of any tangible changes to the path we are on in the context of corporate and international taxation, which reflects the steady as she goes approach.
“One or two large corporate non-resident commercial landlords may be breathing a sigh of relief in that they remain within the charge to income tax rather than corporation tax and will not be impacted by the fixed ratio interest deduction rules which come into effect on 1 April 2017.”