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Less is more - Corporation tax

Charnwood Accountants & Business Advisors - 13/12/2015

Less is more - Corporation tax

 In order to increase tax revenues the Treasury is faced with a conundrum:

-To increase rates of tax charged and hope that this does not prove to be a disincentive to increase profits and investment, or

-To decrease rates of tax charged and hope that this proves to be a stimulant to business growth.

 The Financial Secretary, David Gauke, recently made the following remarks at an international tax conference:

 “The results we are seeing on the ground since we started cutting Corporation Tax have been very encouraging. We’ve seen business investment increasing – with a record number of inward investment projects last year – and some early signs of improvements in productivity…

And, interestingly, we’re also seeing Corporation Tax receipts strengthening.

 Between 2010 and 2014 – that is, during the time that we cut the headline rate from 28% to 21% and cut the small companies rate – annual receipts increased by 12%.

 And if you strip out the financial services sector (where receipts have been heavily affected by losses built up in the financial crisis), Corporation Tax receipts rose by 16% between 2010 and last year. That’s a real terms increase in receipts over a period where the headline rate has been cut by a quarter.”

 So maybe less is more?


This article was provided by Charnwood accountants and Business Advisors LLP:



Charnwood Accountants & Business Advisors
The Point, Granite Way, Mountsorrel, Loughborough, LE12 7TZ
Tel: 01509 621833  Fax: 01509 622850



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