Planned corporation tax cut welcomed

George Osborne's latest signalling of the government's intention to lower corporation tax rates during the current Parliament has encouraged leaders of British industry.

The new Chancellor spoke to the Confederation of British Industry (CBI) on the eve of the disclosure of the new coalition government policy programme.

In his address he said next month's Budget would contain a 'five-year road map for a big reform of corporation tax'.

He also said companies could expect stringent cutting of red-tape to make the setting up process for foreign businesses in the UK one of the fastest and simplest around. ‘Let us tell the world loud and clear that Britain is once again open for business,’ he said.

He stopped short, however, of specifying whether they would enact their manifesto pledge of slashing three per cent off the headline rate.

Reaction to his intentions has largely centered around the specificities they currently lack.

His suggestion, however, that promoting economic recovery in the private sector would be his ‘guiding principle’ was broadly welcomed, along with plans for comprehensive banking reform.

There was disappointment, however, that no commitment was made to cut small business corporation tax to below 20 per cent.

Stephen Herring, senior tax partner at accountants BDO, said it was disappointing as a reduction would "recognise the additional challenges faced by entrepreneurial business."

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