Chancellor Gordon Brown has announced in the Budget that the headline rate of corporation tax will be cut to 28% from April 2008.
Brown said cutting the mainstream corporation tax rate – which is paid on annual profits of more than £1.5m – would make the UK’s rate “lower than America, Germany, France, Japan, and all of our other major competitors”.
Tax experts said the reforms sent out an important signal to companies that might be thinking of re-locating to take advantage of lower tax regimes elsewhere.
However, the rate of corporation tax paid by smaller firms is to rise from 19% to 22% in 2009.
CBI director general Richard Lambert said changes to corporation tax would not help all firms.
“The change will benefit those big, profitable companies that might otherwise be thinking of shifting their activities to lower tax regimes,” he said.
Other points of interest to HR professionals are:
- 50,000 16- to 17-year-olds who sign activity and learning agreements to receive a training wage in return for gaining skills
- Tens of thousands of people who lost their pensions because of company insolvency will get help with a financial assistance scheme increased from £2bn to £8bn
- Efficiency savings of 3% each year to mean the government can release £26bn a year by 2010-11 for front-line services.