Business is set to benefit significantly from company tax cuts in tomorrow's Budget.

Sources say that the standard 32 per cent rate of corporation tax is expected to be cut although the 25 per cent small companies' rate may remain unchanged.

The current standard 32 per cent rate - the rate paid by large non-manufacturing companies such as the banks and insurance companies - is expected to fall to 28 per cent, on target to reach 12.5 per cent by 2003.

However, the lower 25 per cent rate, which applies to the first £50,000 of profits, is unlikely to be cut. But the £50,000 ceiling to which this lower rate applies is likely to be raised to £100,000.

While all companies will eventually be taxed at 12.5 per cent, non-traded income is likely to attract a 25 per cent rate.