Budget: Corporation tax slashed to 23%

The tax rate will be cut in April by two percentage points from its current 28%, rather than the 1% reduction previously announced, and will fall by 1% in each of the next three years.

The reduction will be offset by a £285 million increase in the bank levy from next January to ensure it is not a “net tax cut for banks”, George Osborne announced.

Mr Osborne said: “Other countries are attracting multinationals away from the UK. I want this to be a place that international companies go to, not leave.”

The Government has promised to radically simplify the tax system and reform taxes on profits collected overseas, under an overhaul of the controlled foreign company rules.

This is seen as a move to woo businesses back to the UK after a number of British firms - including marketing and communications giant WPP, office group Regus and pharmaceutical firm Shire - recently switched their headquarters from the UK to escape hefty tax bills.

Mr Osborne said Britain needs a more competitive tax system to keep companies and jobs in the UK.

The UK has “the sixth highest corporation tax rate in the world; a tax system so complex that it overtook India” in complexity, he said.