What does the pledge mean? 

Corporation tax is a tax paid by businesses on profits they make. The main rate, paid by businesses with profits over £250,000 during their accounting period, is 25%, while businesses with profits of £50,000 or less pay a rate of 19%. Businesses with profits between £50,000 and £250,000 pay the main rate of 25%, but this may be reduced through marginal relief. 

According to figures compiled by the Organisation for Economic Cooperation and Development (OECD), in 2024 the UK had the lowest rate of corporation tax in the G7.

Labour’s pledge is to cap corporation tax at this level of 25%, so if corporation tax rates in the UK exceed this figure at any point over the course of this parliament, we’ll consider the pledge to have not been kept. 

What progress has been made?

The UK’s current main rate of corporation tax is 25%. 

This level of corporation tax was set by the previous Conservative government, and at the time of writing has not been changed by the Labour government. 

On 30 October 2024, the day of the Autumn Budget, the government published a ‘Corporate Tax Roadmap’, which it said “sets out the government’s plans on Corporation Tax”. In it, the government included “capping the headline rate of Corporation Tax at 25% for this Parliament” as a “commitment”. 

The government also included a provision on corporation tax in the Finance Bill, presented after the Autumn Budget, which, if passed, will see the main rate of corporation tax remain at 25% “for the financial year 2026”.