Competitive tax System

The Chancellor expressed the Government's intention for the UK to have the most competitive tax system in the G20. He highlighted the recent reduction of the main corporation tax rate from 28% to 26%, to be decreased further over the next three years until it reaches 23% in 2014. Additionally, he highlighted the reduction of the small companies' rate to 20% as a further example of the increasing competiveness of the UK corporate tax system.

International Business

Mr. Osborne went on to state that the UK has become a place for international business to move to, instead of leave, with the taxation of international profits now far more competitive than ever before. He also referenced the imminent introduction of a patent box system resulting in an ultra-competitive 10% rate that is expected to attract knowledge industries from around the world to the UK. As evidence of this, a few companies announced in March that they are considering a return to the UK. More recently, a firm announced it is to move its tax base to the UK in order to benefit from planned changes to the UK's Controlled Foreign Company (CFC) rules. Such announcements only serve to endorse the work already done by the UK Government in both reducing corporate taxation and simplifying the existing tax system.

Simplification of Tax System

Simplification of the tax system, evidenced with the abolishment of over 40 complex tax reliefs in this year's Budget together with the Government's work towards a proposed merger of income tax and national insurance systems, is to result in "a huge reduction in payroll red tape for businessess', said the Chancellor. Mr. Osborne went on to restate his belief that high personal taxes can be as damaging to economic growth as high corporate taxes and reiterated that the current 50% tax rate for those earning over GBP 150,000 would do lasting damage to the economy if it were to become permanent. Instead he stated, "it should be a temporary measure", however just how temporary remains to be seen.

Commitment

The commitment to creating the right conditions for enterprise and small business and to making the UK the best place in Europe to start, finance and grow a business, as was stated post Budget 2011, clearly remains at the forefront of the UK Governments agenda.