Home Estate Planning Rachel Reeves: Labour will cap corporation tax at 25 per cent

Rachel Reeves: Labour will cap corporation tax at 25 per cent

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A Labour government would cap the headline rate of corporation tax at 25 per cent throughout the next Parliament, Rachel Reeves has told bosses.

The shadow Chancellor pledged her party would reject calls from the “right wing of the Conservative Party” to cut the rate, which is the lowest in the G7.

But speaking at Labour’s business conference at the Oval, Reeves vowed: “We will cap the headline rate of corporation tax at its current rate for 25 per cent for the duration of the next Parliament.”

She also promised the party in power would maintain the full capital expensing policy and the annual investment allowance, alongside delivering a “roadmap for business taxation” within the first six months.

She criticised the Conservatives for the “26 changes to our corporation tax arrangements in this parliament alone”, adding: “We can’t go on like this.” 

Reeves stressed that Labour believes the 25 per cent figure represents the “correct balance” between prioritising “our public finances and the demands of a competitive global economy”.

Labour, she pledged, “will make the pro-business choice and the pro-growth choice”, while if Britain’s competitiveness “comes under threat, if necessary we will act”.

Reeves told the audience of business leaders, including FTSE 100 CEOs, gathered at the Kia Oval cricket ground: “That means businesses can plan investment projects today, with the confidence of knowing how their returns will be taxed for the rest of this decade. 

“Be in no doubt. We will campaign as a pro-business party – and we will govern as a pro-business party.”

The announcement comes after Reeves promised at last year’s Make UK conference that Labour would review stability and investment within business taxes.

“We have heard loud and clear the demand for clarity and certainty from business,” she said.

It came as she insisted “economic security” must be the “first priority” of governments, and promised to guard the nation’s finances with “iron discipline” and “iron clad fiscal rules”.

Reeves was introduced on stage by deputy leader Angela Rayner and event sponsor HSBC Innovation Banking.

In a indication of Labour’s warmer relationship with business, Reeves noted that “profit is not something to be disdained”.

The shadow Chancellor, who could become Britain’s first female holder of the great office of state, said Labour would always “respect the Treasury and the Bank of England”.

The party would maintain “iron clad fiscal rules”; strengthen the Office for Budget Responsibility (OBR) “via a new fiscal lock”; and guard public finance with “iron discipline”.

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