Corporation Tax
The question
To ask the Chancellor of the Exchequer, if she will make an assessment of the potential merits of replacing corporation tax rules with a progressive tax based on turnover of companies trading in the UK.
Answered by Dan Tomlinson
To support stability and predictability for businesses, the government published the Corporate Tax Roadmap at the Autumn Budget 2024. Central to this is a commitment to maintain a competitive and sustainable main rate of Corporation Tax by capping it at 25 percent for the duration of this parliament, including generous relief such as Capital Allowances, R&D tax reliefs, and the Patent Box regime.
The roadmap confirms the core features of the tax regime, with consultations planned for potential future changes to ensure a stable business environment and promote growth.
Turnover taxes tend to be more distortive as they do not account for businesses expenses. In contrast the UK’s Corporation Tax is levied on profits, meaning businesses are taxed on what they actually earn after deducting eligible costs, such as wages, and offers a wide range of competitive reliefs to encourage business investment.
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