Budget misses ‘golden moment’ for corporation tax cut
Nearly 500 SMEs have delivered a blunt verdict on the 2025 Autumn Budget, with seven in ten calling for a cut in corporation tax in a snap poll run by Azets.
The online vote – conducted during our post-Autumn Budget webinar – reflects growing frustration among SMEs that the Budget offered “no meaningful relief” after a period of rising costs and faltering confidence.
Peter Gallanagh, Azets’ UK & Ireland CEO, said the Chancellor had “missed a golden moment” to back UK businesses by failing to signal a path towards a lower corporation tax rate, and called for the Chancellor to aim for Ireland’s 12.5%; the UK’s main rate is 25% for companies with profits above £250,000.
Our analysis of UK tax revenues shows that cutting the rate to 15% could potentially save businesses a total of around £36 billion, £4,000 for an SME making £70,000 a year profit and around £100,000 for a firm making £1m a year profit.
Peter Gallanagh said: "Ireland’s 12.5% corporation tax rate has made it a magnet for global investment – creating jobs, boosting infrastructure and increasing tax revenues despite the lower rate.
“The UK government needs to follow its example and introduce a corporation tax rate that allows businesses to reap the same level of benefits, encourages more multi-national companies to set up a base in Britain and creates extra tax revenue and more jobs. A decisive move in that direction would have sent a clear message that the Government sees business as a partner in growth, not simply a revenue line for the Treasury.”
Gallanagh said SMEs were already under strain from rising employer national insurance contributions (costing £25bn a year), minimum wage increases, and the long tail of cumulative inflation – up more than 28% since the pandemic.
“The Budget tightened the screws further,” he added. “Our snapshot webinar poll saw nearly 70% of respondents vote for a reduction in corporation tax to stimulate the UK economy – a clear indication of emphatic support by SMEs for change.”
“SMEs were hoping for a pro-business statement, but instead got higher costs and no roadmap for making the UK more competitive. It’s hard to see how growth accelerates when the very businesses driving it face more pressure, not less.”
According to government figures, corporation tax receipts for 2024-25 were £97.2 billion, up by 4% from the previous financial year and reflecting the full-year effect of the main rate increasing from 19% to 25% from April 2023 under the previous government.
Parliamentary figures show that corporation tax in the last financial year was the fourth largest generator of public sector receipts after income tax at £305 billion, VAT at £172 billion and NICs at £171 billion.
The latest results of Azets’ SME Barometer showed 45% of UK firms showed some form of pessimism about the economy, with a mixture of economic, political and geopolitical issues UK businesses’ biggest cause of concern:
- 53% are worried about higher labour costs,
- 50% are worried about a volatile and changing tax landscape,
- 45% are worried about reduced profit margins, and
- 41% are worried about geopolitical events.
Gallanagh said a meaningful CT reduction would have given SMEs vital breathing space and helped unlock expansion, investment and job creation.
“A lower rate would absolutely reduce Treasury income in the short term – but in the medium term it supports growth, investment, jobs, supply chains and ultimately increases tax receipts.”
Before the Budget, we wrote to the Chancellor proposing practical measures to ease SME pressures, including a corporation tax threshold change.
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