One million firms will benefit from corporation tax cut
- Credit: EDP pics © 2006
George Osborne moved to boost more than a million businesses and attract further inward investment by slashing the rate of corporation tax.
The fillip for firms underscored the message that Britain was 'open for businesses', the chancellor said, as he unveiled a series of reductions which would cut the current levy of 20pc to 19pc in 2017, and 18pc in 2020.
In an effort to bolster the prosperity of small firms, Mr Osborne said he would take action to reduce their national insurance contributions from 2016 by increasing the government's new employment allowance by 50pc to £3,000.
But some business owners will face paying more tax as the chancellor set out measures to overhaul the dividend tax credit and replace it with a tax-free allowance of £5,000 on dividend income.
Mr Osborne said during his budget speech that the country cannot afford to stand still while others rush ahead.
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'We're giving businesses the lower taxes they can count on, to grow with confidence, invest with confidence and create jobs with confidence.'
He added: '[The corporation tax cut] is fair, it's more in line with what we're doing in personal tax and is what almost all other G7 nations do.'
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Salena Dawson, the Federation of Small Businesses regional chairman for East Anglia, said: 'This is a budget focussed on productivity and it is clear that for some time small business have found the lack of skills, especially in rural areas challenging.
'The continued focus on apprenticeships with a levy on larger firms is interesting. The devil as always will be in the detail'
But Mark Abbs, a partner at London chartered accountants Blick Rothenberg, said increasing the tax on dividends would discourage entrepreneurial activity and enterprise.'