Prime Minister Liz Truss has announced that corporation tax will rise to 25% as originally planned in April.

This is a notable reversal of the plan to freeze it at 19%, as detailed in last month’s mini-budget.

The new commitment was made during a press conference, in which Truss addressed the sacking of chancellor Kwasi Kwarteng earlier today (14 October).

It is the second major turnaround of a headline policy in said mini-budget, with the mini-budget’s planned cut to the additional tax rate being scrapped earlier this month.

Truss commented: “It is clear that parts of our mini-budget went further and faster than markets were expecting so the way we are delivering our mission right now has to change.

“We need to act now to reassure the markets of our fiscal discipline.

“I have therefore decided to keep the increase in corporation tax that was planned by the previous government.”

Hargreaves Lansdown senior investment and markets analyst Susannah Streeter says: “Rowing back on pledges not to raise corporation tax hasn’t come as a shock, either to politicos or the markets.

“Truss had to do something to try to convince investors that unfunded tax cuts weren’t out of control, and that the government was trying to take a more responsible fiscal approach.

“Over the medium term the tax reversal may silence the bond vigilantes a little and stem a further exodus from gilts, but the government’s economic credibility has badly suffered over the past few weeks and it’ll take a lot more to repair the damage.

Parachuting Jeremy Hunt into number 11, who was a key supporter of her rival for the leadership, Rishi Sunak, shows how desperate the Prime Minister is to build bridges with the wider conservative party”.