Theresa May reveals radical corporation tax cut plan

She says the UK will have the lowest rate in the G20...

Theresa May reveals radical corporation tax cut plan

Image: Stefan Rousseau / PA Wire/Press Association Images

British Prime Minister Theresa May is set to slash the UK's corporation tax rate, below the 15% promised by Donald Trump during his election campaign.

"We will also review the support we give innovative firms through the tax system... because my aim is not simply for the UK to have the lowest corporate tax rate in the G20, but also one that is profoundly pro-innovation," she said during her address at the CBI conference.

This could have implications for the Irish economy, as the rate cut will give foreign firms an incentive to move to the UK.

When plans for this dramatic rate cut were first mooted, Irish business group IBEC warned that the Irish Government would need to take action to make Ireland more attractive for foreign investment as competition intensifies.

Ibec CEO Danny McCoy said: "Ibec has long highlighted the competitive threat from the UK's increasingly pro-business tax regime. New plans to cut the UK's corporation tax rate is a further wake up call that cannot be ignored. The UK vote to leave the EU only increases the need for Ireland to significantly improve its business and personal tax offering.

"Ireland has had very limited control over major recent political and economic developments. However, we must act decisively in areas where we do have control."

The group called for cuts in capital gains tax, a lower marginal tax rate, and reform of the treatment of share options.

Britain after Brexit

The UK Prime Minister's speech also hinted at a transitional Brexit deal to avoid businesses falling off a "cliff edge" after the pro-EU CBI leadership called for an interim deal, with the UK remaining in the single market.

When asked about getting a transitional deal for the UK Mrs May said: "Obviously as we look at the negotiation we want to get the arrangement that is going to work best for the UK and the arrangement that is going to be best for business in the UK.

"And I'm conscious that there will be issued that need to be looked at."

Ahead of the Autumn Statement, Mrs May also announced that the £2bn of investment in science and research.