New Chancellor Nadhim Zahawi has said he will review Government plans to hike corporation tax next year.

Mr Zahawi, who replaced Rishi Sunak after his shock resignation on Tuesday evening, said “everything is on the table” when questioned over the tax increase.

The corporation tax rate is set to increase from 19p to 25p in April as part of a move designed to raise around £17 billion each year for Treasury coffers.

However, it is thought this could now be reassessed as the Prime Minister’s future comes under pressure from ministers.

Boris Johnson could call on the new Chancellor to cut taxes or roll back the planned increase to win back votes, despite potential repercussions for the Treasury finances.

Mr Zahawi told Times Radio: “The responsible thing to do is make sure we have fiscal discipline because we need to keep inflation under control.

Chris Pincher resignation
Rishi Sunak, who resigned as chancellor on Tuesday, previously announced plans to raise corporation tax (Jonathan Brady/PA)

“But nothing is off the table – I will look at everything.

“When boards invest they invest for the long-term and they do compare corporation tax rates, so I will look at everything.”

In Mr Sunak’s resignation letter, he said he could not agree an economic strategy with Johnson because their stances are “fundamentally too different”.

It comes after the Office for National Statistics reported a rise in Consumer Price Index (CPI) inflation to 9.1% in May, with predictions this will increase as high as 11% later this year.

“I have to make sure I deliver for those who are hard-pressed today and of course bring inflation under control,” former education secretary Mr Zahawi said.

“Inflation is deeply damaging if it gets out of control.”