London Daily

Focus on the big picture.
Friday, Apr 03, 2026

Keir Starmer under pressure to back plans for corporation tax rise

Keir Starmer under pressure to back plans for corporation tax rise

Labour leader has faced backlash after saying he would oppose any new tax on business in budget

Starmer’s stance has prompted some unease within his shadow cabinet.

Keir Starmer is under pressure to back future rises in corporation tax after a backlash when the Labour leader said he would oppose any new tax on business in next week’s budget.

Treasury officials are believed to be looking at increasing the tax on company profits from the current rate of 19% to up to 25% as the government tries to recoup some of the massive debts incurred during the pandemic, though the rise may be delayed until later in the parliament.

During prime minister’s questions on Wednesday, Starmer said: “Now is not the time for tax rises on families and businesses.”

The shadow business secretary, Ed Miliband, has previously backed moves to increase UK corporation tax – which is the fourth lowest among the 37 member countries in the Organisation for Economic Co-operation and Development (OECD).

Labour appeared to soften its position on Wednesday night, suggesting the party would back a steady minimal increase later in the parliament. A source said: “Let’s look at what the chancellor brings forward: if he’s talking about corporation tax going up gradually across the parliament to an OECD average, that’s one thing, but we don’t think there should be tax rises right now where the focus should be supporting business investment and growth.”

The stance prompted some unease within the shadow cabinet. One Labour frontbencher said they believed it would change, saying: “Not totally convinced … This is a pretty progressive tax policy that I don’t know if we should be opposing. I’m not sure the position today will be the one we end up with.”

But another shadow cabinet source said they thought the expected rise in the budget was “kite flying”. Labour’s line was that tax rises were wrong “right now”, the source said, with any rise in corporation tax likely to come into force later in the parliament.

Three other shadow cabinet sources confirmed to the Guardian that they backed the approach to oppose a corporation tax hike next week. One said: “We’ve said for months we will oppose any rise in this budget and it’s consistent with what we’ve been saying that tax rises now will stifle our recovery. The Tories are turning their backs on business and under new leadership there is a new relationship with business.” A source close to Miliband said he backed Starmer’s caution.

On Wednesday Starmer pushed the prime minister to act on council tax rises and businesses rates relief, saying: “Now is not the time for tax rises on families and businesses.” The exchange was likely aimed to drive a wedge between Boris Johnson and his MPs, many of whom are likely to oppose a rise in corporation tax.

The shadow Treasury minister James Murray, appearing on the BBC on Wednesday afternoon, said the party would not back any tax rises. “We’re in the middle of an economic crisis, and this is not the time to do it,” he said. “If you have a country where businesses are closing, where people don’t have money to spend in the economy and where you haven’t got investment going into public services and infrastructure, that is no way to get the country back on its feet.”

A number of Labour MPs expressed alarm at the position, including backers of Starmer. Stella Creasy said Labour should always back ways to make the system fairer.

“A fairer tax system was our ambition before the pandemic, and will be critical to our recovery after as we pick up the pieces,” she said. “We’ve seen several major corporations make substantial profits as a direct consequence of the pandemic – the same companies who will also benefit from the impact of government support getting those who have been hit by redundancy and debt back on their feet.

“But for that to happen those schemes need to be funded now to stop any more families and small businesses from going under. It’s right that we look at our corporation tax rates and capital gains taxes and ask how and when those with the broadest shoulders can contribute a bit more to the task of rebuilding our nation.”

Another former minister said the party should be actively talking up the creation of a windfall tax for businesses that had profited from the pandemic. “Increasing corporation tax does not affect hard-up firms,” they said. “It’s economically illiterate.”

Starmer’s comments prompted more explicit criticism from the party’s left. A spokesman for the grassroots group Momentum, which championed the former leader Jeremy Corbyn and has been critical of Starmer, said: “During the pandemic big corporations like Amazon have cashed in while working people struggle to get by. Labour should support both raising corporation tax and a special Covid-19 windfall tax for sectors that have made super profits.”

Richard Burgon, the former shadow justice secretary who is secretary of the Socialist Campaign Group of MPs, said: “The question facing all politicians now is: who is going to pay for this crisis? And if we don’t have an answer for that, then we are in a position where Labour doesn’t have an answer to one of the biggest questions facing us. The prime minister rejected my call for a windfall tax. But Labour has to make clear that the super-rich corporations who have increased profits pay their fair share to bringing the end to this crisis.”

Newsletter

Related Articles

0:00
0:00
Close
Trump’s Strategic Pressure on UK Seen as Push for Stronger Alignment and Fairer Terms
UK Focuses on Trade Finance to Secure Critical Materials for Defence and Energy Sectors
Majority of UK Businesses Hit by Middle East Conflict While Confidence Holds Firm
UK Royal Navy Faces Renewed Scrutiny as Debate Intensifies Over Capability and Readiness
Reform UK Faces Mounting Distractions as Policy Agenda Struggles to Gain Traction
Investigation Launched Into Northern Cyprus IVF Clinics After UK Families Receive Incorrect Sperm
International Meeting Issues Unified Call to Safeguard Navigation Through Strait of Hormuz
Potential Strait of Hormuz Closure Raises Concerns Over UK Food and Medicine Supply Chains
UK Leads Coalition of Over Forty Nations Urging Iran to Reopen Strait of Hormuz
UK Secures Tariff-Free Access for Medicines in Landmark US Pharma Trade Agreement
King Charles III Invited to Address Joint Session of U.S. Congress in Rare Diplomatic Honor
Debate Grows Over Whether Expanded North Sea Drilling Can Reduce UK Energy Bills
UK Faces Heightened Risk of Jet Fuel Shortages, Airline Chief Warns
UK Ends Police Investigations into Lawful Social Media Posts After Review Finds Overreach
Abramovich Moves to Establish Charity for Frozen Chelsea Sale Proceeds Amid UK Dispute
Starmer Reaffirms NATO Commitment While Responding to Trump’s Strategic Critique
UK Aid Reductions Raise Fears of Severe Human Impact Across Parts of Africa
UK Signals Renewed Push for EU Cooperation as Iran Conflict Reshapes Security Landscape
Bank of England Signals Caution as Bailey Advises Markets Against Expecting Rate Hikes
UK to Convene Global Coalition to Restore Shipping Through Strait of Hormuz
Trump Signals Possible NATO Reassessment, Emphasizes Stronger U.S. Strategic Autonomy
Australia Joins British-Led Efforts to Reopen Strait of Hormuz Amid Escalating Tensions
King Charles Plans US State Visit as UK Strengthens Ties with Trump Leadership
UK Regulator Launches Investigation Into Microsoft’s Business Software Practices
Kanye West Set for High-Profile Return to UK Stage at Wireless Festival
Trump Presses Europe to Strengthen Commitment as Iran Conflict Escalates
UK to Deploy Additional Troops to Middle East Amid Rising Regional Tensions
UK Authorities Face Claims of Heavy-Handed Measures in Monitoring Released Pro-Palestine Activists
Trump Calls on UK to Secure Its Own Energy as Iran Conflict Intensifies
Nigel Farage Declines Invitation to UK Conservative Conference Led by Liz Truss
Trump Warns Allies to Take Responsibility as Rift Deepens with UK and France Over Iran Conflict
How Britain’s Prime Minister Controls U.S. Bomber Access in Escalating Iran Conflict
Trump Urges Allies to Secure Their Own Oil Supplies as Hormuz Crisis Disrupts Global Energy
Russia Expels British Diplomat as UK Pushes Back Against Pressure
White House App Faces Scrutiny After Claims of Continuous User Location Tracking
BBC Faces Scrutiny Over Allegations of Paid Content Linked to Saudi Arabia
UK-France Coastal Patrol Agreement Nears Breakdown Amid Migration Pressures
UK Police Detain Pro-Palestine Activist Again Weeks After Bail Release
FTSE 100 Advances as Energy and Mining Shares Gain Amid Middle East Tensions
Eli Lilly Seeks UK Pricing Deal to Unlock Renewed Pharmaceutical Investment
Three Arrested in UK After Massive Cocaine Haul Discovered Hidden in Banana Shipment
UK Fuel Prices Poised for Further Surge Amid Global Energy Pressures
Apple Subsidiary Penalized by UK Authorities for Breach of Moscow Sanctions
Western Allies Intensify Coordinated Sanctions Strategy Against Russia
UK Lawmakers Face Criticism Over Renewed Push for Social Media Restrictions
Starmer Signals UK Crackdown on Addictive Social Media Features
Rising Costs Push One in Five UK Hospitality Businesses to the Brink of Closure
Man Arrested on Suspicion of Attempted Murder After Car Strikes Pedestrians in UK, Injuring Seven
Escalating Conflict Involving Iran Tightens Fiscal Pressures and Highlights UK Economic Vulnerabilities
UK Moves to Confront Russian ‘Shadow Fleet’ Operating in Its Waters
×