The Daily Update - UK corporation tax

In his first major interview since the Brexit result, the UK Chancellor George Osborne has said he plans to slash corporation tax to below 15% in bid to encourage companies to continue to invest in the UK. At present, corporation tax in the UK stands at 20%, already one of the lowest of any major global economy; it was due to fall to 17% by 2020. Before the vote Osborne had warned that he would have to raise taxes and slash spending in a bid to balance the books by 2020 if the UK voted to leave the EU, however he has now abandoned that target saying the government had to be "realistic about achieving a surplus by the end of the decade".

Hinting about his role after the upcoming conservative leadership race, Osborne said he wanted to play a leading role in shaping the UK economy, saying he wanted to build a “super competitive economy with low business taxes and a global focus”.  In addition to his tax cut pledge, Osborne also set out plans to push for new investment from China, including an extended state visit, as well as seeking a range of bilateral trade deals with major global economies.

However, a word of warning has come from Pascal Lamy, the previous head of the World Trade Organization. Lamy said the announcement on corporation tax was in fact the start of the UK’s Brexit negotiations and that this was the wrong way to go about it. Lamy said "The UK is already activating one of the weapons in this negotiation, which is tax dumping, tax competition. I can understand why he (Osborne) does that, because obviously investors are flowing out from the UK, and he wants to provide them with some sort of premium that would make them think twice before they leave the United Kingdom” adding "And I'm quite convinced that at the end of the day, if you want a proper balanced win-win relationship in the future, starting with tax competition is not the right way psychologically to prepare this negotiation."

Also cautioning of the consequences of the chancellor’s planned direction was the head of tax at the Organisation for Economic Co-operation and Development, stating that whilst understanding the fallout from Brexit “may push the UK to be even more aggressive in its tax offer” aggressive steps in that direction would effectively turn the UK into a tax haven type of economy.

Please read this important information before proceeding. It contains legal and regulatory notices relevant to the information on this site.

This website provides information about Stratton Street Capital LLP ("Stratton Street"). Stratton Street is authorised and regulated by the UK's Financial Conduct Authority. The content of this website has been prepared by Stratton Street from its records and is believed to be accurate but we do not accept any liability or responsibility in respect of the information of any views expressed herein. The information, material and content provided in the pages of this website may be changed at any time by us. Information on this website may be out of date and may not be updated or removed.

The website is provided for the main purpose of providing generic information on Stratton Street and on our investment philosophy for the use of financial professionals in the United Kingdom that qualify as Professional Clients or Eligible Counterparties under the rules of the United Kingdom Financial Conduct Authority (the "FCA"). The information in this website is not intended for the use of and should not be relied on by any person who would qualify as a Retail Client. Products and services referred to on this website are offered only at times when, and in jurisdictions where, they may be lawfully offered. The information on this website is not directed to any person in the United States. The provision of the information on this website does not constitute an offer to purchase securities to any person in the United States (other than a professional fiduciary acting for the account of a non-U.S person) or to any U.S. person as such term is defined under the Securities Act of 1933, as amended.

The website is not intended to offer investors the opportunity to invest in any Alternative Investment Fund ("AIF") product. The AIFs managed by Stratton Street are not being marketed in the European Economic Area ("EEA") and any eligible potential investor from the EEA who wishes to obtain information on the AIFs will only be provided with materials upon receipt by Stratton Street of an appropriate reverse solicitation request in accordance with the requirements of the EU Alternative Investment Fund Managers Directive ("AIFMD") and national law in their home jurisdiction. By proceeding you confirm that you are not accessing this website in the context of a potential investment by an EEA investor in the AIFs managed by Stratton Street and that you have read, understood and agree to these terms.

No information contained in this website should be deemed to constitute the provision of financial, investment or other professional advice in any way. The website should not be relied upon as including sufficient information to support any investment decision. If you are in doubt as to the appropriate course of action we recommend that you consult your own independent financial adviser, stockbroker, solicitor, accountant or other professional adviser. Past performance is not necessarily a guide to the future. The value of investments and the income from them may go down as well as up. An application for any investment or service referred to on this site may only be made on the basis of the offer document, key features, prospectus or other applicable terms relating to the specific investment or service.

Where we provide hypertext links to other locations on the Internet, we do so for information purposes only. We are not responsible for the content of any other websites or pages linked to or linking to this website. We have not verified the content of any such websites. Such websites may contain products and services that are not authorised in your jurisdiction. Following links to any other websites or pages shall be at your own risk and we shall not be responsible or liable for any damages or in other way in connection with linking.

By using this site, you should be aware that we may disclose any information that we hold about you to any regulatory authority to which we are subject, or to any person legally empowered to require such information.

This website uses cookies to improve user experience, by clicking the "I Accept" button below means you consent to the use of cookies on our website.