New UK chancellor Nadhim Zahawi to review corporation tax rises

Nadhim Zahawi, the new chancellor of the exchequer, has called for a review of the UK’s corporate tax policy in a clear hint that a rise from 19p to 25p due next year could be reduced or scrapped.

Zahawi, who took up the post on Tuesday evening after Rishi Sunak’s resignation, said he wanted to examine the planned increases in corporation tax to make sure British companies remain competitive.

He told Sky News on Wednesday: “I will look at everything. There’s nothing off the table. I want to be one of the most competitive countries in the world for investment.”

He added: “I know that boards around the world, when they make investment decisions, they’re long-term, and the one tax they can compare globally is corporation tax. I want to make sure that we are as competitive as we can be whilst maintaining fiscal discipline.”

In a separate interview with the BBC, Zahawi said: “Of course I will be looking at where else can I make sure the economy remains competitive and dynamic with our European neighbours and the rest of the world as well.”

Sunak said last year when he announced the corporation tax rise – the first since 1974 – that larger incentives for investment would mean that only those companies that failed to invest would pay higher levels of tax.

Zahawi, a former oil industry adviser, is known to be a supporter of lower taxes and most recently opposed a windfall tax on oil and gas companies operating in the North Sea. He told Sky his priority was to “rebuild and grow the economy”.

However, in a round of interviews on TV and radio he emphasised that any spending plans, including possible tax cuts, should not deflect from the need to limit increases in borrowing and to bring down inflation.

“The prime minister wants to make sure that we have fiscal discipline. I share that focus with him,” he told the BBC.

He told Sky: “The important thing is to get inflation under control, be fiscally responsible. The first thing we’ve got to do is make sure that we are really careful about, whether it’s public sector pay, is that inflation doesn’t continue to be fuelled. Today, we are facing a global battle with inflation.”

In an interview on LBC Radio, he said he was concerned about the steep rise in the cost of borrowing. “The debt we’re servicing this year will be at £83bn. Last year, it was at £20bn. So a four times increase in debt servicing.”

Zahawi added: “Inflation if allowed to get out of control is deeply, deeply damaging, especially for the most disadvantaged families in the society that we’re trying to help.”