Budget 2020: corporate tax rate maintained at 19%
Initially, the plan was to reduce corporation tax by 2% from April 2020, but this was discarded as soon as the Conservatives came to power last December with a large majority.
Maintaining the corporate tax rate at 19% will bring in £46bn in the first year, rising to £75bn a year by 2024-25.
The cut had been a 2016 budget commitment but was a costly measure that was seen as an unnecessary cut by many commentators, as the UK has one of the lowest corporate tax rates in the G20.
The main corporation tax rate remains at 19% for the year beginning April 1, 2020. This keeps the rate at 19%, instead of reducing it to 17% from April 1, 2020.
The corporation tax charge and main rate will also be set at 19% for the year beginning April 1, 2021.
Legislation will be introduced in the 2020 Finance Bill to change the main corporate tax rate for all non-closing profits to 19% for the 2020 financial year. principal will also be set at 19% for all non-profit ring closing profits for the 2021 financial year.
Alex Henderson, tax partner at PwC, said: “While not unexpected, freezing the corporate tax rate at 19% will be a significant tax measure and is expected to bring in £33bn for the Chancellor by now. 2024/25.
‘The announcement of a ‘tax conditionality’ consultation suggests the UK is available to be ‘good corporate citizens’.
“It will be important, however, that there is a similar focus on ease of interaction with government and HMRC, including a focus on simplicity and certainty, to make the UK comparatively one of the best places to do business.”