- The 2025 edition of the International Tax Competitiveness Index (ITCI), published today by the US-based Tax Foundation, finds that the UK remains near the bottom of the global pile, with a tax system that is both uncompetitive and anti-growth
- The UK ranks 32nd out of 38 OECD countries, the same overall position as last year and ahead of only Italy and France among our major competitors
- Labour increases in CGT and Employer’s National Insurance have seen our ranking on personal taxation fall sharply, from 20th to 25th
- Our property tax system is judged the second worst in the world, due both to its high rates and bad design
- A CPS briefing published to accompany the index warns that many of the rumoured tax rises in the Budget could make things worse, unless politicians grasp the nettle on tax reform
The latest edition of the International Tax Competitiveness Index, published today by the US-based Tax Foundation, shows the UK continuing to languish in 32nd place out of 38 OECD countries in terms of overall tax competitiveness — ahead of only Italy and France in the G7.
The Index is an annual ranking of 38 OECD countries based on how pro-growth their tax systems are, examining more than 40 different tax policy variables to assess how supportive each country’s tax system is of economic growth. Crucially, it makes no judgment on the overall level of taxation – only on the system’s design.
Analysis by the Centre for Policy Studies, published alongside the Index, highlights the negative impact of last year’s Budget, with the rise in the higher rate of Capital Gains Tax and the changes to Employer’s National Insurance pushing the UK down five places on the Index’s individual taxation measure.
The CPS argues that if Britain wants to be more competitive, it should prioritise three key changes, as and when the public finances allow:
- Abolish stamp duty on land and shares. Our property ranking would improve by six places and lift the UK’s overall rank to 31st
- Return the headline corporation tax rate to 19%. This would improve our rank for business taxation by 16 places to 12th
- Build on the success of full expensing by extending it to all capital investment. This would lift the UK’s rank in the corporate taxation category from 28th to 17th
- If all of these changes were implemented together, they would raise the UK’s overall ranking from 32nd to 20th
Briefing author and CPS Head of Economic and Fiscal Policy, Daniel Herring, said:
‘The UK’s continued lack of tax competitiveness would be a concern for any Chancellor ahead of a Budget where tax hikes are widely mooted.
‘Rachel Reeves should resist the urge to crank up pressure on businesses and instead learn from our international competitors. Our current tax system is already uncompetitive and anti-growth – the country cannot afford for things to get worse.’
ENDS
NOTES TO EDITORS
- For further information and media requests, please contact Melisa Tourt on 07399 251110 and [email protected]
- Daniel Herring is Head of Economic and Fiscal Policy at the Centre for Policy Studies
- ‘The UK’s International Tax Competitiveness 2025 Update’ is available here.
- This is the twelfth edition of the International Tax Competitiveness Index, published annually by the Tax Foundation in Washington, DC.
- The Centre for Policy Studies is one of the oldest and most influential think tanks in Westminster. With a focus on taxation, economic growth, housing, immigration, and energy abundance, its goal is to develop policies that widen enterprise, ownership and opportunity
- The Tax Foundation is the world’s leading nonpartisan tax policy nonprofit. For over 80 years, its mission has remained the same: to improve lives through tax policies that lead to greater economic growth and opportunity.
Date Added: Monday 20th October 2025
