One week out from the UK general election, the Tories have made the headline-grabbing pledge to freeze taxes. Our UK expert Vince Cheshire looks at how the promise would affect business.

In what is of course being dubbed a “last-minute gimmick,” David Cameron yesterday announced that a re-elected Tory government would legislate for a ban on tax rises within 100 days to freeze VAT, national insurance and income tax until 2020. The leader of the Conservatives intends to focus on other ways of clearing the deficit – namely by reducing the welfare bill and targeting tax evasion, aggressive avoidance and tax planning to claw back £5billion annually.

If it came to be, the five-year Tory tax-lock would not just equal more cash for households but also for businesses.

The corporation tax rate for company profits is 20%, and the Conservatives have previously said they want to build on corporation tax cuts, “to maintain the most competitive business tax regime in the G20.”

They have pledged to review business rates by the end of 2015, with the aim that by 2017, rates would properly reflect modern economy structures with clearer billing, information sharing and overall efficiency. If the tax rate is frozen while the economy continues to grow, it results in an obvious boom for business.

National insurance is a cost to companies, both in tax terms and administratively, so a five-year lock on NI is positive also. Essentially, any signal to the global business world that the UK is a stable market to invest in, will attract those who have been nervous about austerity.

In contrast, Labour has been accused of being against big business, and at the beginning of this month was the target of a letter backed by more than 100 senior executives.

If elected, the party plans to abolish non-dom status (which we’ll go into next week), and put small business first in the queue for tax cuts. Rather than cut corporation tax for the benefit of large firms, the party will cut and then freeze small business rates.

Tax rebates are on the table for businesses that agree to pay the Living Wage however, and Labour has pledged not to raise VAT. A draft anti-tax avoidance bill is set to be presented to the Chancellor from day one if a Labour government is elected.

A key pledge by the Lib Dems is the imposition of a new corporation tax on the banking sector, with the aim to raise £1 billion per year. The party would continue to reform business tax to ensure competitiveness, though small and medium-sized enterprises are the focus for any tax cuts.

Like Labour and the Tories, the Lib Dems intend to hold global firms to account – cracking down on avoidance and ensuring they pay their fair share of taxes. Country-by-country reporting obligations would be extended to all UK listed companies. Interest deductibility would be limited on corporation tax.

We’re right of course, to take the Tory tax-lock promise with a grain of salt. But if it does happen to eventuate, it would be great for UK business.