Britain is facing increasing competition from other countries which are eager to establish themselves as business-friendly and helpful to companies deciding where to invest in and create jobs, or to entrepreneurs considering whether and where to start new firms. Equally, given the difficulties which many established firms have been facing in getting loans from banks or the money markets, the ability to retain more of their profit as an internal source of funds can help troubled firms to survive, or strong ones to grow faster. As a result the Government will cut the main rate of Corporation Tax to 24 pence and the Small Companies Rate to 20 pence. We will also consider how to simplify small business taxes as well.
• Smaller firms (which form a large proportion of the UK’s visitor economy) are often eligible for small firms business rate relief but fail to claim it. We will consider how to make it automatic, to increase the proportion of small firms who claim this valuable tax break.
There are also calls from within the tourism industry for preferentially low rates of VAT for the visitor economy. These proposals take a variety of forms and describe different potential impacts of a cut in VAT. The Government will continue to keep all taxes under review, and will consider proposals for new reliefs carefully, but the financial position we inherited means we must give priority to maintaining our fiscal base.