Our CEO comments: A Corporation Tax cut from 25% to 15% should be considered by government to revive growth
UK must ‘think big’ and follow Ireland’s approach to Corporation Tax to boost businesses, create jobs and fire up the economy
The Chancellor should cut Corporation Tax to 15% to encourage business growth and bring more multi-national companies to Britain. Following Ireland’s approach would benefit businesses, encourage economic growth and improve the UK’s tax revenue per head.
Peter Gallanagh, Azets UK CEO, commented: "Ireland’s Corporation Tax rate of 12.5% has made it a magnet for global brands – creating jobs, boosting infrastructure, and increasing tax revenues despite the lower rate. The 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.”
Our analysis of UK tax revenues shows that cutting the rate of Corporation Tax to 15% could:
- potentially save businesses in the UK a total of around £36bn,
- potentially save around £4k for an SME making £70k a year profit, and
- potentially save around £100k for a firm making £1m a year profit.
These savings could provide a fighting fund for businesses to invest in growth:
“This is a huge sum of money in total – more than the Government received in Stamp Taxes and Capital Gains Tax last year. An amount of this size would give businesses the cash to invest in people or technology – to allow them to improve pay, evolve their technology or recruit new staff.
“I accept that at the larger end of the market not all of that money is going to be reinvested, but that’s counterbalanced by the extra jobs and opportunities for supply chains this would create in the UK, which would also have a broader economic benefit through the revenue the Treasury receives in Income Tax and National Insurance.”
A comparison of the UK and Ireland 2024 tax income figures shows that Ireland has a higher tax take per head (£18,008) than the UK (£16,300) and that Corporation Tax makes up a significantly higher percentage of the Irish Government’s revenue (34.3%) than the UK’s (12.8%).
This illustrates that a lower overall rate of Corporation Tax doesn’t necessarily translate to lower income from taxes:
“If Ireland is anything to go by, lower rates of Corporation Tax can translate to a bigger overall tax take and higher rate of tax per head – the difference is that in Ireland smaller firms pay a significantly lower amount than they do over here,” he said.
Cutting Corporation Tax would also send a strong message of support to businesses after a period in which Government policy and economic instability has hit them hard.
“Businesses have had a torrid couple of years of rising expenses, increased National Insurance and National Minimum Wage, and geopolitical uncertainty – and they’re telling us almost daily that this has affected their outgoings and profit margins and put the brakes on growth. Cutting the Corporation Tax rate would show that the Government sees the UK business community as a partner in economic growth instead of just a source of revenue for the Treasury,” he said.
“Now is the time for the Chancellor to send a message that the Government is serious about supporting businesses – and giving them the fuel they need to grow and prosper. Let’s hope she takes the opportunity to do this at the Budget.”
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