Corporation tax cut could have business loans implications, research claimed

Thu, 22 Mar 2007

The revelation that corporation tax will be cut could dissuade UK-based companies from moving overseas, an accountancy expert has claimed, and could also potentially reduce dependency on business loans.

Chancellor Gordon Brown, in his 11th annual Budget address to parliament, surprised many financing forecasters by cutting corporation tax from 30p to 28p, effective from April 2008.

Meanwhile, Mr Brown predicted that the British economy would grow at between 2.5 per cent and three per cent in 2008 - higher than any of the other G7 countries, the business loans sector may be interested to know.

Commenting on the news, Stephen Herring, tax partner at accountancy specialist BDO Stoy Hayward, suggested that the tax cut could help Britain maintain its economic growth.

"It is to be hoped that large international groups are persuaded that this change is sufficiently helpful to dissuade them from considering relocating activities to less highly-taxed jurisdictions," he said.

In the same Budget, Mr Brown also announced changes to the tax rate for small businesses.

Corporation tax for small firms will rise by 2p to 22p by 2009, Mr Brown revealed, in news that may concern some companies with outstanding business loans.

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