Chancellor George Osborne will announce plans on Tuesday to make Britain's corporate tax system the most competitive in the G20 group of nations, the Financial Times reported on Tuesday.

In an overhaul of anti-avoidance rules Osborne is expected to say that companies' offshore operations will now only be caught by the British tax net in situations that pose the highest risk of artificial diversion of UK profits, according to the FT.

The decision to exempt other situations comes after a consultation in which businesses said that increased compliance burdens might deter groups from basing their headquarters in the Britain.

(Reporting by Stephen Mangan; editing by Carol Bishopric)