As part of the government’s Growth Plan 2022, Kwarteng said the rise planned for next year will not go ahead.

It would have seen a tiered rise for companies, depending on their profits. For those making more than £250,000 profit, the tax was set to rise from 19% to to 24%.

A rise from 19% to 25% was planned for companies making between £50,000 and £250,000 while those with profits of less than £50,000 wouldn’t see a change to the 19% currently charged.

It will now remain at 19% for all companies.

The Treasury said that at 19% the tax rate is significantly lower than the rest of the G7 and the lowest in the G20.

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The aim of cutting the proposed rise is to make the UK’s corporation tax rate more competitive so it can “incentivise investment and enterprise”, the Treasury said.

‘Creating conditions for businesses to thrive’

In a statement it said: “The government wants to grow the economy by creating the conditions for businesses to thrive, which will create jobs and increase investment in the UK.

“The government believes that robust growth is vital to funding vital public services in the UK and keeping taxes low for working families across the UK, so that people keep more of what they earn.”

Since 2010, there have been several cuts to the main rate of Corporation Tax, reducing it from 28% in 2010 to 19% in April 2017.

The cancellation of the rate increase is estimated to save companies £18.7 billion per year by 2026/27

Nigel Holmes, Director of Tax at innovation funding specialist Catax, said: “All businesses will benefit from changes, which cross the tax spectrum.

“The key takeaways for business are the scrapping of an imminent rise in Corporation Tax for companies with higher profits, a vastly more generous Capital Allowance relief on plant and machinery within dozens of new investment zones and the abandoning of reductions in the Annual Investment Allowance.

“Kwasi Kwarteng was jeered for describing a new era for Britain but, in tax terms, that’s exactly what the government has delivered, and businesses up and down the country will be delighted with what they heard.”