Soaring corporation tax costs may deter foreign investment in UK: Lubbock Fine
Lubbock Fine, a chartered accountant practice, has issued a warning concerning the escalating costs of corporation tax for UK businesses, which have now reached an all-time high of £92.1bn.
The latest HM Revenue and Customs (HMRC) data reveals that corporation tax receipts for the year ending 30 June 2025 have risen by 5% from the previous year. This increase follows the UK Government’s decision to raise the corporation tax rate from 19% to 25% in April 2023.
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Lubbock Fine points to this tax hike as a possible factor in the subsequent decline in foreign direct investment (FDI) into the UK.
According to the company’s analysis, the number of FDI projects has diminished by 17% over a two-year period, falling to 1,375 in 2024/25 from 1,654 in 2022/23.
This downturn in investment activity has also led to a 13% reduction in the number of new jobs created by FDI, with figures declining from 79,500 to 69,300.
Lubbock Fine partner and the company’s German Desk head Alex Altmann said: “Corporation tax and taxes on businesses generally are becoming an ever-larger slice of the UK tax base – but at what cost to the economy?”
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By GlobalData“Record corporation tax receipts may look like a win for the Treasury, but they risk putting long-term growth and job creation in jeopardy.
“Lower business tax rates were once one of the UK’s key competitive advantages over other European economies – but that edge has now largely disappeared.
“Countries like the US and France have been cutting their corporate tax rates while the UK has been raising them. This makes the UK a less attractive destination for international businesses weighing where to expand next.
“The UK needs to remain globally competitive. Higher taxes on businesses reduce the incentive for overseas companies to set up shop here. With job creation from foreign investment already falling, the link between rising tax rates and slowing inward investment is becoming harder to ignore.”
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