UK Government Faces £4 Billion Corporate Tax Shortfall

by Caroline Maxwell, Tax-News.com, London

22 November 2001

Falling corporate tax receipts may have threatened Gordon Brown's ambitious spending plans for health and education, new figures from the Office of National Statistics have revealed.

The ONS data, released on Tuesday shows that falling profits have led to a decrease in business tax revenue for the government, and there are fears that the shortfall could be as much as £4 billion.

Although the Chancellor has signalled that he has no plans to raise taxes in next year's budget, the disappointing corporate tax levels have meant that for the first seven months of this financial year, total government revenues were up just 3.2%, compared to the 4.3% rise which was forecast for the whole year in March. The recent transition to quarterly tax payments for UK corporates has also meant that even less of an increase is likely in the remaining five months of the financial year.

All this, say tax experts, has left Mr Brown with very little 'wiggle room' for his pre-budget report next week, and he has been urged by economists to be cautious about making any further promises on increased spending or tax cuts.

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