In the June Budget the Chancellor announced the reduction of Corporation Tax for large and small businesses with a cut in the main rate from 28% to 24% over the next 4 years and a reduction in the small profits rate from 21% to 20% from April 2011.

Yesterdays tax reform announcements include a Corporate Tax Road Map that commits providing a clear timetable to deliver these changes, including how the Government will engage with business at each stage of policy development, including;

• details on how the Government will reform the UK's outdated Controlled Foreign Company (CFC) rules by introducing more targeted rules in 2012 and how they will apply to financing and intellectual property. As a first step to make the rules more competitive, a package of interim improvements will be introduced in 2011;
• introducing a Patent Box in April 2013 - a 10% CT rate on profits from patents, reaffirming the Government's commitment to retain and build on the existing Research and Development (R&D) tax credit scheme to create the right environment for innovative companies to prosper
• a commitment to legislate an opt-in exemption for profits earned in foreign branches of UK companies in 2011. Under this more territorial approach, companies in the new regime will no longer be subject to UK CT on their foreign branch profits.

The Exchequer Secretary to the Treasury, David Gauke MP said:
"In recent years, too many businesses have left the UK amid concerns over tax competitiveness. It's time to reverse this trend. Our tax system was once viewed as an asset. And it needs to be an asset again.

"That is why the Government is prioritising corporate tax reform. Responding to the concerns of business, the UK is headed for a more competitive, simpler, and more stable tax system in the future, creating the right conditions for investment

Responding to the announcements Richard Mannion, national tax director at Smith & Williamson comments:
"Under the previous Government the chancellor made major tax changes twice a year in the PBR and the Budget itself. Mr Osborne has formerly announced that this will not be his style and we know that the 2010 PBR was the last one - at least for the duration of this Parliament."

We also already know that the next Budget will take place on 23 March 2011, but we wait to see if the next one is moved to November 2011 so as to give longer notice of any planned changes."

"So far as this PBR was concerned there was very little tax content - just renewed commitment to make the UK competitive in terms of corporate tax."

"The Government is expected to publish draft Finance Bill 2011 clauses on 9 December 2010 alongside its response on a number of tax consultations that it has undertaken since the Emergency Budget in June, including Corporate Capital Gains, Furnished Holiday Lettings, pension annuities, Financial Securities for PAYE and NICs, and HMRC powers."