Budget 2016: Osborne Cuts Corporation Tax By 17 Per Cent

Tax Expert Say Announcement Could Encourage Multinationals To UK


Kate Rawlings, Press Officer | 0114 274 4238

George Osborne has pledged to cut corporation tax to 17 per cent by April 2020 in his Budget announcement today.

The cut will be funded by chasing tax from multinational companies and will form part of plans to help the "millions of firms who pay their fair tax.”

The Chancellor announced he would "get rid of loopholes for multinationals and tax for small businesses" with his plan to tackle royalty payments and those mega-corporations that "deliberately over-borrow in the UK".

Expected to come into force from April 2017, he pledged to restrict interest deductibility for the largest companies at 30 per cent of UK earnings.

He said he would introduce new "hybrid mismatch rules to stop the complex structures that allow some multinationals to avoid paying any tax anywhere, or to deduct the same expenses in more than one country".

He revealed a string of measures to tackle tax avoidance by the one per cent of firms with profits of £5m or more in order to raise an extra £9bn for the Treasury, enabling him to lower corporation tax. 

He added. "All of these reforms to corporation tax will help create a modern tax code that better reflects the reality of the global economy."

Partner and tax expert at law firm Irwin Mitchell, Alex Barnes, said:

Expert Opinion
“The Chancellor has again stuck the boot into tax planning implemented by multi-national companies.”

“This will make it much harder for them to shift profits offshore outside of the UK tax net and may encourage such companies to re-locate to the UK, particularly given the proposed reduction in corporation tax.”

“The big question is - will this help the Chancellor to re-balance the books in the long term?”

“The reduction on Capital Gains Tax (CGT) will be generally be welcomed albeit it is questionable how this will help the large majority of the UK population who have few assets on which CGT could be payable.”
Alex Barnes, Partner