Surprise Tax Break Package Welcomed By UK Businesses

by Jason Gorringe, Tax-News.com, London

27 March 2002

The UK government has taken the unusual step of releasing details of several key tax breaks for businesses in the United Kingdom ahead of the Chancellor's April 17 budget.

The measures, which were released in the form of a House of Commons written answer, are set to come into effect on April 1, and include:

- Tax exemptions for gains and losses on substantial shareholdings in order to allow businesses to restructure quickly, and to ensure that key decisions are made for commercial rather than primarily tax reasons.

- Tax relief for UK-based companies on the cost of intellectual property, goodwill, and other intangible assets.

- A new tax credit to boost research and development among larger companies.

It is estimated that the tax breaks will reduce the burden on British businesses quite substantially, and the sector has welcomed their announcement ahead of the budget, although several of the measures announced yesterday were foreshadowed in Gordon Brown's pre-budget speech in November.

Speaking on Tuesday morning, Paymaster-General Dawn Primarolo commented that:

'The government is very determined to press ahead with a pro-enterprise, pro-competition, and very importantly, pro-jobs agenda...The three measures that have been announced today are all about making sure that we continue to boost measures for productivity to close the productivity gap with our competitors.'

Recommended