Budget 2015: Corporation tax just got cut again even though the UK already has the lowest rate in the G20

The rate will have fallen from 28 per cent in 2010 to 18 per cent by 2020

The main banks in London's Canary Wharf (AFP/Getty Images)

Corporation tax will be cut again for businesses from 20 per cent to 18 per cent, George Osborne has said.

The Chancellor announced in his budget that the rate would be reduced to the new level by 2020, with a 1 per cent interim cut in 2017.

Mr Osborne claimed that previous reductions in Corporation tax from 28 per cent to 20 per cent over the last parliament had created jobs and increased investment.

“Now at 20% for large and small businesses alike we have the joint lowest rate of corporation tax in the G20 and so there are now those who say we don’t need to do more,” he said.

“I profoundly disagree with them too – this country cannot afford to stand still while others rush ahead and I’m not prepared to see that happened.

“Today I announce that I am cutting it again. Britain’s Corporation tax rate will fall to 19% in 2017 and 18% in 2020.”

The further reduction is expected to cost £2.47bn a year by 2020.

The Corporate tax rate in the United States is 40 per cent, France’s is 33.3 per cent, Japan’s is 33 per cent, and German’s is 29.65 per cent.

“We are giving businesses the lower taxes they can count on to grow with confidence, invest with confidence, create jobs with confidence,” Mr Osborne said.

“A new 18 per cent rate of corporation tax, sending the message out around the world, loud and clear, that Britain is open for business.”

The Guardian newspaper reported this morning that the British state spends £93bn on huge subsidies and tax breaks – more than £3,500 for each UK household.

The Chancellor will also raise the Employment Allowance by £1,000 to £1,000 by April 2016. He argues the move will support small businesses.

Other major policies introduce in the Budget include a rise in the minimum wage, cuts to tax credits, a further cap on public sector pay and a freeze in working age benefits.

New rules on dividends and tax allowances were also unveiled.