I rather take the opposite view - that it'll have little or no effect. Other than a few high profile cases like Starbucks and Google etc., there is little evidence that mainstream UK-based international companies of the type that we all invest in via the London Stock Exchange evade tax so significantly that paying a 'standard' tax rate would fundamentally affect the value of UK companies and indices. Also, as with so many things devised by politicians, there is a confused message here; on the one hand Governments vie with each other to LOWER Corporation Tax rates to attract businesses to their shores and offer incentives such as Capital Allowances and The Patent Box to induce them to invest by offsetting these costs against CT.........and then publicly lambast them when they do! Of course it's hard to swallow when companies use obviously phoney schemes to shift profits made in one country to another with a lower tax rate (I sold something on Ebay to another UK resident but noted that the transaction seemed to go via Luxembourg!), but human nature is such that if there's a legal way to do it, they will. Who here doesn't use ISA's and how bad do you feel about that? Some commentators even advocate doing away with Corporation Tax altogether. There would then be a 'level playing field' for all companies, net profits would be correspondingly higher leading to higher company valuations, greater investment and it is likely that the tax take would more than be recouped via higher (taxed) dividends and Capital Gains taxes.

Whether the politicians pull it off or not, I won't be losing much sleep over it.

I know zilch about this, but it is interesting to see that some commentators are advocating doing away with Corporation Tax altogether. Would it work to recoup it via slightly raised/altered VAT, or would that have impossible side-effects?

I'm sure governments hate to lose a tax, but simplicity is a powerful thing. When people understand the system they are not afraid to be involved - and that is so vital. Without the simplicity of PEPs in the 1980's I don't know where I'd be now.

" if corporation tax became 0% then governments would have to raise both indirect and direct tax."

Not necessarily. Companies state their "earnings per share" and pay dividends on after-tax income. Dividends come with a 10% tax credit attached because the income is already deemed to have been taxed at the company level. If you reduce Corporation Tax to 0%, companies will be able to pay higher dividends which would then be paid without the tax credit but taxed at the appropriate rate in the recipient's hands. Company valuations, to the extent that they are a multiple of earnings, would rise correspondingly, so Capital Gains Tax receipts should increase accordingly. Theoretically, it ought to be a 'Nil Sum Game' (i.e. what you lose on one side of the equation you make on the other). It is the argument behind REIT's which relieve property companies of taxation on their income as long as most of it is then distributed to shareholders to be taxed as dividends.