This House of Lords Library Briefing has been prepared in advance of the debate due to take place on 11 July 2019 in the House of Lords on the motion moved by Baroness Neville-Rolfe (Conservative) that “this House takes note of the case for creating an environment which encourages (1) business growth, and (2) job creation, especially in relation to the tax system”.Jump to full report >>
The UK ranks highly in international pro-business league tables. However, the UK economy faces a number of challenges. These include low GDP growth and productivity, and historically-high levels of employment, but low-skilled and low-wage jobs in some sectors. Other challenges include the potential impact of the UK’s withdrawal from the EU. To address these, the Government has launched its industrial strategy, which aims to increase investment in infrastructure and skills to encourage growth and job creation.
Since the 2008 financial crisis, the UK’s corporation tax rate has been reduced from 28% to its current rate of 19%. It is due to reduce to 17% in 2020. Corporation tax receipts are now at their highest ever level. However, there is debate over whether the tax rate reductions have resulted in greater business investment in the UK. Over the same period, employers’ national insurance rates have increased. This has provoked criticism that the burden of business taxation has been shifted from shareholders to employees. Similarly, business rates receipts have increased, placing a separate cost burden on businesses, particularly small- and medium-sized enterprises in the retail sector.
This briefing focuses on the UK’s business taxation regime. It provides information on the three most substantial business taxes (in terms of revenues raised): corporation tax; employers’ national insurance contributions; and business rates. The briefing also summarises proposals for reform of these taxes.
Lords Library notes LLN-2019-0088
Author: James Goddard
The House of Lords Library delivers research and information services to Members and staff of the House in support of parliamentary business.