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The UK Government’s decision to put up Corporation Tax from 19% to 25%, taking effect from next April, will cause the country to fall 16 places on the global ‘league table’ for corporate tax, from sixth to 21st.
That is the finding of new research reported by Accountancy Today and shows the stark impact of the change that received Royal Assent in June 2021. Even after the increase, the UK is set to be more competitive than many comparable economies.
“A fine balancing act”
A tax expert quoted for the Accountancy Today story, Andrew Snowdon, commented: “For years, the UK has been known as an established locale for international business, and these upcoming tax hikes may lead investors to question the UK as a place to set up shop.
“The Government is undertaking a fine balancing act between keeping the UK attractive for business owners large and small, as well as remaining competitive in the global arena.
“While the UK has spearheaded one of the most dramatic corporate tax increases globally, many countries are likely to follow suit now the competition for rock bottom tax rates appears to have ended.”
However, there has been more scathing criticism of the Corporation Tax increase from other sources – such as John Redwood, an MP for the ruling Conservative Party, who described it as a “bad policy at a worse time” that would “turn off investment when people are worried about a recession, and there is less money to attract.”
So, where would the UK figure in the new international rankings for corporate tax?
The UK’s sixth place in the ‘league table’ for corporate tax competitiveness in the 2020/21 tax year places it level with Poland and behind only the Republic of Ireland, Romania, Belarus, and Croatia. Its 19% rate for this tax is also well below the European (22.6%) and global (25.1%) averages.
Even the new tax rate would leave the UK just shy of the global average in 2020/21 terms, and alongside such parts of the world like Spain, Uruguay, the Philippines, Guatemala, and China.
Countries with much higher corporate tax rates than the UK’s impending new rate, as of 2020/21, included the likes of New Zealand, Germany, Mexico, Brazil, Malta, and Japan.
Would you appreciate the tailored Corporation Tax support in Newton Abbot, Plymouth or Wellington that would enable your organisation to keep on top of its responsibilities in this area? If so, you are welcome to enquire with the TS Partners team today.
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