Labour reject calls to cut 25% corporation tax

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Peninsula Team, Peninsula Team

(Last updated )

A Labour government would not increase the 25% corporation tax if voted in according to shadow Chancellor Rachel Reeves

In an attempt to win over businesses at a corporate event in London, attended by over 400 City and industrial leaders, Reeves stressed that a Labour government would put in a cap on the current 25% corporation tax rate. This comes after stating the cap on bankers’ bonuses would not be reinstated.

Reeves also committed to full expensing, enabling businesses to claim back 100% of the cost of IT equipment and machinery against tax on their profits. The £1m annual investment allowance will also be maintained.

Reeves said: ‘We reject the calls from those on the right wing of the Conservative party to cut corporation tax. Our current rate is the lowest in the G7.

‘We believe that a 25% rate strikes the correct balance between the needs of our public finances and the demands of a competitive global economy.

‘The next Labour government will make the pro-business choice and the pro-growth choice. We will cap the headline rate of corporation tax at its current rate of 25% for the next parliament. And should our competitiveness come under threat, if necessary, we will act.’

Reeves targeted the Conservative’s 26 changes to corporation tax saying: ‘If we expect business to invest in Britain, then tax rates cannot shoot up and down like a yo-yo, according to each political whim.’

When questioned about her views on bankers’ bonuses earlier this week, Reeves said: ‘The cap on bankers’ bonuses was brought in in the aftermath of the global financial crisis and that was the right thing to do to rebuild the public finances.

‘But that has gone now and we don’t have any intention of bringing that back. And as Chancellor of the Exchequer, I would want to be a champion of a successful and thriving financial services industry in the UK.’

Reeves made clear there was no possibility of the cap returning.

The next Budget is due on 6 March and the PM has to call a general election by the end of January 2025 at the latest.

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