Has the government kept the UK’s corporation tax capped at 25%?

Updated 20 November 2024
Pledge

“Labour will cap corporation tax at the current level of 25%, the lowest in the G7, for the entire parliament”

Labour manifesto, page 31

Our verdict

The UK’s main level of corporation tax is currently 25%, and the government has published a Corporate Tax Roadmap confirming it intends to cap it at this level for the duration of the parliament.

What does the pledge mean? 

Corporation tax is a tax paid by businesses on profits they make. The main rate, paid by businesses with profits over £250,000 during their accounting period, is 25%, while businesses with profits of £50,000 or less pay a rate of 19%. Businesses with profits between £50,000 and £250,000 pay the main rate of 25%, but this may be reduced through marginal relief

According to figures compiled by the Organisation for Economic Cooperation and Development (OECD), in 2024 the UK had the lowest rate of corporation tax in the G7.

Labour’s pledge is to cap corporation tax at this level of 25%, so if corporation tax rates in the UK exceed this figure at any point over the course of this parliament, we’ll consider the pledge to have not been kept. 

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What progress has been made?

The UK’s current main rate of corporation tax is 25%. 

This level of corporation tax was set by the previous Conservative government, and at the time of writing has not been changed by the Labour government. 

On 30 October 2024, the day of the Autumn Budget, the government published a ‘Corporate Tax Roadmap’, which it said “sets out the government’s plans on Corporation Tax”. In it, the government included “capping the headline rate of Corporation Tax at 25% for this Parliament” as a “commitment”. 

The government also included a provision on corporation tax in the Finance Bill, presented after the Autumn Budget, which, if passed, will see the main rate of corporation tax remain at 25% “for the financial year 2026”. 

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Sir Keir Starmer, Prime Minister – 24 September 2024