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General Election 2019 Manifestoes – What Each Party is Proposing for Corporation Tax

4 months ago
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The 2019 General Election will take place on 12th December. It has been fought largely over Brexit and while that’s a huge concern for many micro businesses up and down the country, we turn our attention to a different matter.

Some of the biggest questions being asked by businesses around the UK right now are ‘How will the general election result affect my business?’ and ‘How much Corporation Tax is each party promising if they come into power?’. In this piece we compare how much Corporation Tax UK businesses will need to pay under governments led by each political party. We then compare these rates to other countries around the world with advanced economies such as the US, Germany and Japan.

general election corporation tax promises labour tories lib dem

Labour’s Corporation Tax Plans 

 

Under a labour government, businesses making more than £300,000 a year will be required to pay 26% corporation tax in order to reverse cuts made by the Conservative party over the last 9 years. Companies generating less than £300,000 a year would be required to pay 21% corporation tax starting from 2022. 

Conservative Corporation Tax Proposals

The Conservatives did initially plan to reduce the corporation tax rates from the current 19% down to 17%. However, they recently changed their plans and postponed this cut in order to increase spending on public services. Therefore, under a Conservative government, Corporation Tax rates should remain at 19%. 

Liberal Democrats Plans for Corporation Tax 

The Liberal Democrats’ plan is to raise Corporation Tax by 1% if they come into government, with their proposed rate being 20% which will reverse the Conservative’s reduction. They plan to keep this rate stable with a predictable future. 

Green Party’s Corporation Tax Proposal 

The Green Party’s plan is to raise the current Corporation Tax rate to 24%. This will be in line with the Organisation for Economic Cooperation and Development (OECD) average. They also wish to advocate public country-by-country reporting and consolidated Corporate Tax across the EU in order to prevent profit shifting.

The Brexit Party Corporation Tax Plans 

The Brexit Party state that they will reform Corporation Tax in their manifesto, however they have not revealed what changes will be made. Although they have pledged to zero rate Corporation Tax for the first £10,000 of pre-tax profits if they are to come into government. 

How do these rates compare with other countries? 

So now we know the Corporate Tax rate plans from each political party in the UK. But if these changes were made, how would our Corporate Tax rates compare with businesses from countries overseas? 

In the chart below, we show the current Corporation Tax rates in 7 of the largest IMF- advanced economies in the world; the G7 countries. These countries consist of the United Kingdom, USA, Canada, Germany, Japan, France and Italy.

 

corporation tax around the world 

As you can see from the graph above, the UK’s Corporate Tax rate is currently the lowest out of all of the G7 countries, standing at a rate of 19% (blue bar). The country with the highest Corporation tax rate is Canada, with a rate of 38%. This is followed by France (33.3%), Germany (31.5%) and Japan (30.86%). Italy’s tax Corporate Tax rate is 24% and is followed by the USA whose rate stands at 21%. 

 

The dotted lines on the above graph show how much Corporation Tax UK businesses would have to pay if each political party were to come into power compared with other countries’ rates. 

 

As you can see, there would be no change if the Conservatives came into power and a slight increase if the Liberal Democrats were to come into government. If your business makes less than £300,000 a year, Labour would bring in a Corporate Tax rate of 21% (in line with the USA). However, if your business makes more than this, you would be required to pay a higher rate of 26%, which is higher than the USA and Italy but still lower than the other G7 countries. If the Green party came into power, companies would pay 24% Corporate Tax, which sits in line with Italy’s current rate. 

 

We hope this article has provided you with everything you need to know about how the results of the upcoming general election will affect how much Corporation Tax your business will be required to pay. 

 

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