Simon Read
Personal Finance Reporter

Prime Minister Liz Truss's U-turn on corporation tax means it will rise from 19% to 25% next April - a move that should add an estimated £18bn a year in tax revenue to the government's coffers.

Corporation tax is paid on profits by UK companies and foreign companies with UK offices.

Before the Conservatives came to power in 2010, it was charged at 28%, but was then cut several times before being reduced to 19% in 2017.

In his March Budget, the former Chancellor Rishi Sunak announced the tax would climb from 19% to 25% in April 2023. He said it was fair to ask companies to contribute more after the government spent billions of pounds supporting them during the Covid pandemic.

However, Liz Truss had pledged to reverse the decision before her U-turn was confirmed today.

Read more here

Truss's press conference has 'hastened her demise' - Tory MPpublished at 15:02 British Summer Time 14 October 2022

15:02 BST 14 October 2022

Chris Mason
Political editor

There was astonishment among reporters that the news conference was so short - not least the prime minister’s reluctance to take many questions.

Of course journalists want to ask questions. It matters for reasons of accountability.

But it also matters for her in terms of credibility among her MPs and in the financial markets.

Plenty of reassurance is needed and it’s not obvious that that will have done the job.

One Tory MP texted me immediately afterwards:

"I voted for Liz but I think she just appointed her successor. Awful. Sadly think that hastened her demise."

Westminster asking if PM can survivepublished at 14:52 British Summer Time 14 October 2022

14:52 BST 14 October 2022

Nick Eardley
Chief political correspondent

Remember how close Liz Truss and Kwasi Kwarteng were. They designed the government's economic strategy together - they were the closest of political allies.

So can the prime minister survive this?

It's still a key question many are asking in Westminster.

The PM's argument is that she needs to deliver economic stability.

The problem she has is many of her own MPs blame her for much of the instability that she says she will fix.

A very short press conferencepublished at 14:49 British Summer Time 14 October 2022

14:49 BST 14 October 2022

Nick Eardley
Chief political correspondent

That was a very short press conference from the prime minister.

She took just four questions.

It was designed to reassure, but I'm not sure the pace of the explanation will do that with Conservative MPs.

One former cabinet minister I've just spoken to described the press conference as "awful".

They added: "That did not look like a woman that's fighting back... There's not much reason for optimism".

Finally, Truss is asked about comments from former Chancellor Philip Hammond who told the BBC earlier that she has "trashed" the Tory Party's reputation.

She is asked by ITV'S Robert Peston if she will apologise to her party.

Truss responds that she is determined to deliver on what she set out when she campaigned to be party leader.

She says the UK needs to have a high-growth economy, but recognises the "difficult issues" facing the country.

It was right in the national interest to make the decisions she has announced today, she adds.

And with that she ends the conference, saying "thank you very much".

Truss is quizzed by the BBC's Chris Mason whether she still has credibility to govern.

"What I've done today is make sure we have economic stability," she insists, before paying tribute to her new chancellor's experience.

She reiterates that it's been "a very difficult time globally".

The next question comes from the Sun's Harry Cole, who says Truss and Kwarteng developed the mini-Budget together and asks the PM how it is she gets to stay when the chancellor was sacked?

Truss says her priority is making sure the government delivers economic stability, which she says is why she's taken the difficult decisions she has today.

The PM adds the plan is still to deliver economic growth, but that she has to act in the national interest as prime minister.

Prime Minister Liz Truss is now taking questions from journalists.

A reporter from the Telegraph asks Truss to explain why she should remain as prime minister given what has happened today.

Truss says: "I'm absolutely determined to see through what I promised - to deliver a higher growth, more prosperous United Kingdom to see us though the storm we face.

"We've already delivered the energy price guarantee, making sure people aren't facing huge bills this winter.

"It was right, in the face of issues we had, that I acted decisively to ensure we had economic stability - that is vitally important to people and businesses right across our country."

Truss appears to admit to mistakespublished at 14:41 British Summer Time 14 October 2022

14:41 BST 14 October 2022

Nick Eardley
Chief political correspondent

The prime minister is making clear she has not changed her fundamental position - that the economic priority has to be growth.

But she has admitted for the first time that the government went further and faster than the markets expected.

This is important - Truss seems to be admitting she and the former chancellor made mistakes in selling their plan.

Hence the U-turn on corporation tax, which she hopes will help show the markets the government is serious about balancing the books. To try and get back on track, she has junked a key pledge she made in the Conservative leadership race.

Truss says she was "incredibly sorry" to lose Kwasi Kwarteng as chancellor - paying tribute to a "great friend".

The prime minister says Hunt "shares my vision", and hails his experience as a minister.

Hunt will deliver the medium-term fiscal plan at the end of the month, she says.

Truss says her new Chancellor Jeremy Hunt will drive her mission to "go for growth" and bring together the reforms the UK needs.

She says she has acted "decisively" today because her priority is to act in the national interest.

"This is difficult, but we will get through the storm".

Truss says it's "clear" that parts of her government's mini-budget have gone to "further and faster" than expected.

She goes on to say that "we need to act now to reassure the markets of our fiscal discipline".

Therefore, she says the decision has been made to keep the increase in corporation tax.

This will raise £18bn in taxes for the country, she adds.

Prime Minister Liz Truss says she wants to deliver growth.

She says she wants a country where people can get good jobs, arguing the UK has been held back.

"I want to deliver a low tax, high growth economy", the prime minister adds.

The prime minister is now at the lectern inside Downing Street, where she will deliver her news conference.

She is expected to announce a U-turn on parts of her government's mini-budget, which sparked a backlash and market turmoil.

Earlier this morning Truss sacked Kwasi Kwarteng as chancellor and replaced him with Jeremy Hunt.

We'll bring you all the updates from what she says and you can watch live above.

Prime Minister Liz Truss is to deliver a press conference shortly after sacking Chancellor Kwasi Kwarteng, with another U-turn expected on the government's mini-budget.

The shadow chancellor says only her party can stabilise the economy and get Britain "out of this mess".

Reacting to the sacking of Kwasi Kwarteng as chancellor, Labour's Rachel Reeves tweeted, external: "Changing the chancellor doesn't undo the damage that's been done.

"We don't just need a change in chancellor, we need a change in government.

"Only Labour offers the leadership and ideas Britain needs to secure the economy and get out of this mess."

Prime Minister Liz Truss has paid tribute to former Chancellor Kwasi Kwarteng, thanking him for his "huge friendship and support".

In a letter, she claims it was Kwarteng who chose to resign - describing this as a decision made in the "national interest". Earlier, Kwarteng signalled he was sacked, saying he was asked to "step aside".

The PM wrote: "I deeply respect the decision you have taken today. You have put the national interest first."

She adds: "We share the same vision for our country and the same firm conviction to go for growth.

"I know that you will continue to support the mission that we share to deliver a low tax, high wage, high growth economy."

Image source, Downing Street

Ed Argar will take over chief secretary to the treasury - the second in command over the country's finances.

Argar will be moving from his role at the Cabinet Office as paymaster general, swapping roles with his predecessor Chris Philp, who becomes the new paymaster general.

And in fact moments later Downing Street confirmed officially that Jeremy Hunt has been made chancellor.

During the leadership contest over the summer, Hunt put himself forward to be the next Tory leader but after not gaining enough support from fellow MPs he supported Rishi Sunak's bid.

Hunt will be the fourth chancellor this year.

Chris Mason
Political editor

I expect Jeremy Hunt will be confirmed as the new chancellor at the prime minister's news conference in the next hour.

The Treasury is not formally confirming it is him, prior to Liz Truss's announcement.