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Budget 2013: Corporation tax slashed to 20% and ALL firms to get 2,000 National Insurance cut to boost business and encourage small companies to hire staff
Chancellor has already slashed the headline tax rate from 28% to 24%Due to fall to 23% next month, 21% in April 2014 and now 20% in 2015But some bosses believe it should be cut lower than the 12.5% in Ireland
Employers' NI contributions will be reduced by 2,000 for every company
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Going down: This graph from figures on the Institute for Fiscal Studies website shows how the standard rate of corporation tax has dropped from 34 per cent in 1990/91 to 24 per cent in 2012/13
Announcing the cut to 21 per cent in the Autumn Statement last December, Mr Osborne said it was ‘the lowest rate of any major western economy’.
He added: ‘It is an advert for our country that says come here, invest here, create jobs here. Britain is open for business.’ Tax experts said a further cut could be on the way in the Budget.
Stephen Herring, a tax partner at BDO, said in advance of the announcement: ‘We would not dismiss a commitment by the Chancellor to introduce a flat 20 per cent corporation tax rate by the end of this Parliament.
Traditional pose: Chancellor George Osborne has already slashed the headline rate from 28 per cent to 24 per cent and it is due to fall to 23 per cent next month and 21 per cent in April 2014
A further cut in corporation tax would
be welcomed by British business with some bosses talking in private of
the need to cut the rate to below the 12.5 per cent seen in Ireland to
entice firms to Britain.
IRELAND'S FOREIGN INVESTMENT DRIVE WITH A 12.5% TAX RATE
Ireland's low tax rate of 12.5 per cent is seen as a key factor in attracting foreign investment.
The country's English-speaking population and falling labour and property costs have also encouraged companies to set up there.
Huge foreign firms such as Google have built offices in Ireland and then employed legal tax avoidance strategies to maximise profits.
Meanwhile, firms are to be offered a 2,000 cut
in their total national insurance bill, which ministers hope will
encourage small companies to take on extra staff.
Employers' NI contributions will be
reduced by 2,000 for every company. The employment allowance would mean
that a firm could take on one person on 22,000 without any additional
Because the discount is per company
not per employee, ministers say it will be of greater benefit to small
firms than multi-nationals whose NI bill runs into millions.