Chancellor George Osborne has announced that corporation tax will be reduced by 2 per cent from April 2011.
The tax will then be reduced by 1 per cent a year for the following three years until it reaches 23 per cent.
Delivering today’s Budget, Osborne said he wants the UK to become one of the most competitive countries in the world and this reduction will see the rate of corporation tax become the lowest in the G7.
He said: “I want Britain to be the place that international business wants to go to, not the place they want to leave.
“From Shanghai to Seattle, I want it to be heard clearly around the world – Britain is open for business.”
But Osborne said this is not an opportunity for banks to pay less tax and said the bank levy will be increased from next year to offset the reduction in corporation tax.