9 July 2015 Insurance

Corporation tax to fall to 18% by 2020: UK Budget

Corporation tax in the UK will be slashed to 18 percent by 2020, according to Chancellor George Osborne who presented the UK Budget today (July 8, 2015).

The tax rate will fall to 19 percent in 2017, followed by 18 percent in 2020.

“Now at 20 percent for large and small businesses alike, we have the joint lowest rate of corporation tax in the G20,” said Osborne. “And so there are those who say we do not need to do more. I profoundly disagree with them too.”

“This country cannot afford to stand still while others rush ahead. I am not prepared to see that happen. Today I announce that I am cutting it again.”

The cuts are expected to save small and large businesses a further £6.6 billion by 2021, and will benefit 1.1 million businesses. The reduction is expected to cost the Treasury £2.5 billion by 2020.

Osborne added: “There are those in this house who said we were wrong to cut corporation tax in the last parliament – but it created millions more jobs, brought businesses back to Britain and increased much needed investment – so I profoundly disagree.”

Colin Graham, PwC global insurance tax leader, said: “The Summer Budget will largely be viewed as mixed newsby groups in the insurance sector. The Chancellor has shown his commitment to ensuring Britain remains competitive by announcing a cut in corporation tax to 18 percent by 2020. However insurance, particularly the London market, is a global business and it is important that the Chancellor ensures the UK remains the most competitive place in the G20 to do business."

Huw Evans, director general of the Association of British Insurers (ABI), added: “Further cuts to corporation tax are good news. They will continue to make the UK a highly competitive destination for insurers and savings providers and enhance London's position as the insurance capital of the world.”

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