Second Tranche Of Pro-Business Tax Measures In UK

by Justin Gorringe, Tax-News.com, London

02 April 2002

With the formal unveiling of the UK's budget still nearly three weeks off, Gordon Brown, the finance minister, has again broken with the usual tradition of clam-tight confidentiality over budget measures by announcing a second package of tax breaks for business.

Last Tuesday he revealed tax measures for big business worth more than UK£500m annually; now he has has announced a package of measures aimed at helping small business, including a reduction in capital gains tax on assets held for a year from 35% to 20%, and a reduction from 30% to 10% for assets held for two years.

A flat-rate value added tax scheme will be introduced for businesses with up to UK£100,000 turnover, there will be tax relief for investment in enterprises in disadvantaged areas, and an exemption from the one-off stamp duty levy for commercial properties will be extended.

Last week's pro-business measures included tax exemptions for gains and losses on substantial shareholdings in order to allow businesses to restructure quickly, tax relief for UK-based companies on the cost of intellectual property, goodwill, and other intangible assets, and a new tax credit to boost research and development among larger companies.

These sweeteners bode ill for the taxpayer on April 17th, when Mr Brown is expected to announce swingeing increases in tax to pay for improvements to the nation's moribund health service.

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