UK to have lowest corporation tax rate in G20, Theresa May to announce

Theresa May - Image credit: Press Association

Theresa May is expected tell business leaders today that the UK Government wants to slash corporation tax while offering billions of extra investment in innovation. 

In a speech to business leaders later today, the Prime Minister will set out plans for the UK Government to invest an extra £2bn a year by 2020 on research and development.

“It is a new way of thinking for government – a new approach. It is about government stepping up, not stepping back, building on our strengths, and helping Britain overcome the long-standing challenges in our economy that have held us back for too long," she will say.

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It comes as a survey shows 7 in 10 firms will either maintain or increase their own spending on innovation in the light of the EU referendum vote. 

Speaking at the CBI conference, the Prime Minister will pledge more government support for innovative firms.

"Britain has firms and researchers leading in some of the most exciting fields of human discovery. We need to back them and turn research strengths into commercial success," she will say.

"We will also review the support we give innovative firms through the tax system... because my aim is not simply for the UK to have the lowest corporate tax rate in the G20, but also one that is profoundly pro-innovation."

Corporation tax will fall to 17 per cent by 2020, the lowest rate in major advanced economies. 

US president-elect Donald Trump has said he wants a 15 per cent rate of corporation tax, although the Treasury apparently believes the UK would still offer a more competitive regime once extra taxes are factored in.

May will also warn businesses that they must play their part in society by making sure they pay their taxes and contribute to their local communities.

“When a small minority of businesses and business figures appear to game the system and work to a different set of rules, the social contract between businesses and society fails," she will say.

The director general of the CBI, Carolyn Fairbairn, urged the Government to use Wednesday's Autumn Statement to prioritise spending on research and development.

“This Autumn Statement comes at a real crunch point to support our inventors, makers and designers, so the Chancellor must make the most of the tools at his disposal.

“The CBI wants to see a long-term commitment to target 3 per cent of GDP in R&D spending by 2025 and a doubling of Innovate UK’s budget," she said.

 A survey of CBI members found that 70 per cent were planning to increase or maintain their spending on innovation, while also demanding more clarity over trading arrangements after the UK has left the EU.

Close to half of the companies surveyed (41 per cent) said tariff-free access for goods was among their top priorities.