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Thursday, Sep 11, 2025

Rishi Sunak vows to cut taxes for business to tackle cost of living crisis

Rishi Sunak vows to cut taxes for business to tackle cost of living crisis

Chancellor to urge investment in innovation at CBI speech as UK inflation soars to 9%

Rishi Sunak has vowed to cut taxes for business in his autumn budget, as the Treasury continues to weigh up interventions to tackle the cost of living.

With MPs from across the Tory party urging him to take emergency action to help struggling families after inflation hit a 40-year high of 9%, Sunak will tell business leaders at the CBI dinner, “never, ever doubt we are on your side”.

During the speech on Wednesday night, he will call for more investment in innovation to grow the economy – and say the government will cut taxes to enable business to do so.

“We need you to invest more, train more and innovate more,” the chancellor will say. “In the autumn budget we will cut your taxes to encourage you to do all those things. That is the path to higher productivity, higher living standards and a more prosperous and secure future.”

The CBI has been calling for more generous allowances, to allow companies to write off more of the cost of investment against their tax bill.

Sunak introduced a “super deduction” to incentivise investment, but that is due to end in April next year, just as the corporation tax rate is due to increase, from 19% to 23%.

The chancellor is expected to say that the government will act to tackle inflation as well as supporting people into better paid jobs, setting out a three-point plan on the cost of living, boosting growth and investment.

Boris Johnson came under pressure from the Labour leader, Keir Starmer, at prime minister’s questions on Wednesday about the government’s failure to do more to help hard-pressed consumers.

Urging the prime minister to impose a windfall tax on energy companies, Starmer said, “He just doesn’t get it, does he? He doesn’t actually understand what working families are going through in this country, struggling about how they are going to pay their bills.

Starmer went on: “He’s on the side of excess profits for oil and gas companies. We’re on the side of working people. And there you have it.”


Johnson and Sunak have held a series of meetings aimed at thrashing out a package of measures to ease the cost of living crisis.

Options under consideration include a 1p income tax cut from the autumn or a potential VAT cut, but new measures to help with the cost-of-living could come sooner, including an increase in the warm homes discount for the poorest families.

The scheme operates via energy companies, and saw bills cut by £140 last winter. The Treasury could broaden the number of households covered, and boost its value, perhaps by up to £500, as energy bills surge again in October.

In his speech, Sunak will stress that the government cannot wholly offset the sharp increase in prices, which has been driven by household fuel bills, but also the rising cost of goods including food.

“I cannot pretend this will be easy. As I told the House of Commons yesterday: there is no measure any government could take, no law we could pass, that can make these global forces disappear overnight. The next few months will be tough,” he will say.

He is expected to stress measures the government has already taken, including the fuel duty cut, council tax discounts and the change to the universal credit taper rate as well as the national minimum wage increase.

“As the situation evolves our response will evolve. I have always been clear, we stand ready to do more,” he will say.

The Treasury said the comments would flesh out pledges in Sunak’s Mais lecture, where he said the priority for tax cuts would be on business investment. He said the overall tax treatment of capital investment was much less generous than the OECD average.

“It is unclear that cutting the headline corporation tax rate did lead to a step change in business investment; we need our future tax policy to be targeted and strategic,” he said at the lecture. “So as I develop a business tax strategy for the years ahead, it seems likely to me that a priority will be to cut taxes on business investment.”

Last year the government announced its intention to increase the headline rate of corporation tax, the tax businesses pay on their profits. That is scheduled to rise to 25% for company profits over £250,000 from April 2023 – though it was announced alongside investment incentives.

MPs told the Commons on Tuesday that some of their constituents were turning to shoplifting for essentials, while another warned that he had heard of cases of attempted suicide among those who could not afford to make ends meet.

As MPs continued to debate the Queen’s speech on Tuesday, Conservatives from across the party called for more action on the cost of living. Bernard Jenkin, who chairs the Commons liaison committee, laid out what he said was a £13.5bn package of policies, including restoring the £20 uplift in universal credit made during the pandemic.

“A summer package to rescue the most vulnerable households is needed to avoid real financial distress and personal anguish and to support economic demand of the most vulnerable households, or we are creating possibly a worse recession than is already expected,” he said.

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