Conservatives to delay corporation tax reduction

02/03/2010

Shadow Chancellor George Osborne says he will reduce corporation tax if the Conservatives win the next general election - but there may be some months to wait.

He pledged at the weekend to cut the headline rate of company tax from 28p to 25p. However, it was later admitted that the changes are unlikely to come into place until April 2011.

The promise was made on the first day of the Conservative Party Conference in Brighton. Osborne took the opportunity to confirm the cut, which he had revealed previously, and added that it would be announced in an emergency budget. This budget will occur within 50 days of an election win, said Osborne.

The fact, however, that the introduction of the cut in headline taxes for businesses could be delayed by almost a year has been powerful ammunition for Tory critics. Many claim that businesses should not be getting too excited about the cuts as the delay shows they are both complex and controversial.

The Tory plans to cut the standard rate of corporate tax is teamed with plans to scrap a series of other reliefs and allowances that help businesses to invest. Alistair Darling says the rate cut is paid for by “a huge tax hike on business investment that hits manufacturing hardest.”