Political Parties Lay Out Corporation Tax Plans

Julie Palmer

Regional Managing Partner

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Political Parties Lay Out Corporation Tax Plans

Updated: 22nd November 2019

Race to Number 10: Corporation Tax Promises

The Conservative and Labour parties have outlined their respective intentions for headline rates of corporation tax that would be demanded of companies throughout the country if either were to win the upcoming General Election.

There had been an expectation that the Tory party leader and current prime minister Boris Johnson would drop the rate from 19 per cent to 17 per cent in 2020, if he were to be backed by the country next month.

However, in a speech made to the Confederation of British Industry (CBI) earlier this week, Mr Johnson made clear that corporation tax will instead be maintained at its current levels in the event of a Tory majority.

The prime minister explained that the 19 per cent corporation tax rate needed to be maintained in order to fund some of the pledges he’s making with regard to public spending and particularly the NHS.

Mr Johnson said the tax cut for businesses would need to be shelved for now at least because “the NHS is the nation’s priority”.

"The Conservative and Labour parties have outlined their respective intentions for headline rates of corporation tax"

Meanwhile, the Labour Party, led by Jeremy Corbyn, has released its manifesto and pledged to raise the corporation tax rate to 26 per cent by 2022, where it was in 2011.

Mr Corbyn told the same CBI conference this week that he wanted to “rebalance the way we do things”.

“This doesn’t mean massive change for everybody but it does mean some [more] taxes at the very top,” he said, insisting that by doing so a government led by him would help to “create a more productive society”.

Speaking to the CBI, Mr Johnson accused Mr Corbyn of preparing to take corporation tax to “the highest levels in Europe”, if the Labour leader were to take over as prime minster.

However, there are several major European economies in which corporation taxes are currently higher than the 26 per cent rate proposed by the Labour Party, including France and Germany, where the headline rates are at 31 per cent and 30 per cent respectively.

The Liberal Democrats led by Jo Swinson have said in their manifesto published this week that they would raise corporation tax back to 20 per cent if they were to win a majority after next month’s election.