UK will have most competitive business rates despite tax hike, Chancellor insists

Jeremy Hunt says even though he intends to increase corporation tax to 25%, Britain is still more attractive than rivals

When making a bid for the leadership of the Conservatives last year, Jeremy Hunt was keen on a 15% corporation rate. PA

UK Chancellor Jeremy Hunt said he wants Britain to have "the most competitive business tax rates" following calls from business leaders and his own backbench MPs to scrap a planned rise in corporation tax.

Ahead of next Wednesday's Budget, Mr Hunt said the increase in the main business rate from 19 per cent to 25 per cent due in April would still leave the UK with a lower rate than "nearly all" major rivals.

The Chancellor said he wanted to lower the tax burden on businesses, but "it's not something we're going to be able to do all in one go".

'Embarrassed, ashamed'

Mr Hunt was speaking to Tory MPs Esther McVey and Philip Davies in an interview for their GB News show to be broadcast on Saturday.

Former Cabinet minister Ms McVey asked him if he was "embarrassed, ashamed" to have "the highest levels of taxation in modern history".

The measures unveiled by the Chancellor in his autumn statement in November meant the tax burden would rise to its highest sustained level since the Second World War.

Mr Hunt said the burden was "not what I want at all", but that he needed to demonstrate a responsible approach to the public finances.

He added: "But if you're saying to me, as a Conservative Chancellor, do I want to bring down taxes? Well, I want to bring down personal taxes, because that is at the heart of what being a Conservative is, but I want to bring down business taxes even more."

Tory MPs have urged the Chancellor to rethink his rate hike. Bloomberg

The Chancellor is under pressure from prominent Tories, including former prime minister Boris Johnson, to cut corporation tax rather than hike it by 6 per cent.

But Mr Hunt said the real focus should be on the effective rate, which takes into account the allowances open to companies to reduce what they actually pay in tax.

But he added the headline rate "even at 25 per cent, is lower than nearly all our major rivals: France, Germany and so on".

When making a bid for the leadership of the Conservatives last year, Mr Hunt was keen on a 15 per cent rate.

Economic stability and a responsible approach to the nation's finances were needed to lower inflation, he said.

"If you're saying to me: is it my ambition for us to have the most competitive business tax rates? Do I want to make progress? Yes, I do."