Corporation tax likely to be cut as Brexit proceeds

The longer-term aim of the new Conservative government led by Prime Minister Theresa May as the UK negotiates its exit from the EU, would be to seek to reduce corporation tax to the same level as that in the Republic of Ireland, suggested Maude.

“I would hope that it would be part of a plan to reduce corporation tax further,”​ said Maude. “It is already at competitive rates, but it is one of the things the government can do ​– not necessarily immediately, but over time. That’s unmistakenly part of making Britain the best place in the world to attract investment from businesses.​

12.5% corporation tax​

“A good benchmark for me is the Irish rate, which is 12.5%, and the closer we get to that the happier, I think, a lot of businesses will be and the more attractive Britain will be as a destination for investment.”​

Former Chancellor George Osborne had announced in March this year his ambition to reduce the UK’s corporation tax from its current level of 20% to 15%. However, it is not known whether his successor Philip Hammond has similar plans.

Speaking at the opening of the PPMA Total exhibition, organised by the Processing & Packaging Machinery Association at the National Exhibition Centre near Birmingham yesterday (September 27), Maude also said he expected the government to negotiate a “bespoke” ​trade agreement with the EU as part of Brexit, rather than copying those of other third countries.

“It should be a priority to get the most open and free trading relationship with the EU,”​ said Maud. “There is a bewildering array of models available off-the-shelf for our future trading arrangement. None of them will be where we end up. We are not Norway, we are not Switzerland, we are not Canada ​– we are not even Albania.​

“We are much bigger and our trade is much more closely intermingled with the rest of the EU, and I expect something far more bespoke can be achieved and will be achieved than any of the above.”​

Free movement of EU nationals​

He added that “unfettered free movement”​ of EU nationals across borders was already coming under pressure from other Member States, so that negotiating tighter controls on movement between the EU and the UK might not prove such an obstacle as many believe.

“There is an increasing understanding that any action that harms the UK economy ultimately harms EU economies,” ​he added. “I expect the voices of calm, practical reason to remain.”​

But, added Maude: “That doesn’t mean by any means that the UK will get everything that it wants.”​