A boost for small businesses as Theresa May announces a cut in Corporation Tax?
As far as small businesses are concerned, government plans this year have been a mixed bag. Putting aside the uncertainties and potential opportunities of Brexit, this has been the year that small business owners have seen the amount of tax-free dividends out of their companies reduced to a miserly £5,000. On the other hand, Theresa May this week outlined a plan to cut Corporation Tax to 15%, on top of the current plans to reduce it from 20% to 17% by 2020.
Speaking at the CBI in advance of today’s Autumn Statement, the Prime Minister said that her “aim is not simply to have the lowest corporate tax rate in the G20, but also one that is profoundly pro-innovation.”
To complement this vision, Theresa May also announced a new scientific research fund of £2bn that will back areas such as robotics and technology, as well as helping businesses commercialise innovations.
The plans do raise questions about what other measures will be announced in Wednesday’s Autumn Statement. Chancellor Philip Hammond is under pressure to allocate extra funds to the NHS – and given the lack of growth in the economy, combined with the fact that most of the straightforward spending cuts have already been made – it does hint that the Treasury will raise borrowing to meet his commitments.
That said, planning to lower Corporation Tax is clearly a foundation for a post-Brexit economy. May and Hammond will be hoping the new regime will retain and attract businesses to the UK, as well as fostering new industries. If it works, there could be good times ahead – but as always, the proof is in the pudding.
If you’d like advice on Corporation Tax or accessing Research and Development grants or tax breaks, please get in touch. We’d be very happy to help you.