Business gets a boost with 25% cap on corporation tax

Rachel Reeves announced her fourth big tax freeze yesterday, pledging to cap corporation tax at 25 per cent for the lifetime of this parliament as she made a bold offer to the world’s largest businesses to invest in Britain.

- DAVID MADDOX

It leaves her with little space to manoeuvre in this month’s Budget, having already promised not to raise income tax, VAT, or employee contributions on national insurance. And it will increase speculation that she will try to fill a £25bn gap in her spending commitments by raising wealth taxes such as capital gains and inheritance, or employer national insurance contributions.

The corporation tax announcement came as she and Sir Keir Starmer led the charge to bring in billions in investment and attempted to calm fears about the Budget on 30 October and the recent row over workers’ rights while drawing a line under the “pain of Brexit”.

The summit saw DP World restore its plans for a £1bn investment in the London Gateway port expansion project after withdrawing over the weekend. Other announcements included:

• A £1.1bn investment by Manchester Airports Group to expand Stansted

• £6.3bn worth of investment in data centres by CyrusOne, ServiceNow, cloudHQ and CoreWeave

• Ports operator ABP committing more than £200m to a joint investment with Stena Line for a new freight terminal at Immingham

• A £150m investment by Imperial College London in a new research and development campus

• Confirmation of £24bn worth of clean energy investment, which was signalled last week in the build-up to the summit

As both the prime minister and the chancellor pledged that the EU reset would amount to a reset with business, too, they came under pressure again from Labour London mayor Sadiq Khan, speaking at the International Investment Summit at the Guildhall in the City of London, to consider rejoining the single market.