UK Chancellor Confirms £1bn Tax Break For Disadvantaged Areas

Jason Gorringe, Tax-News.com, London

02 March 2001

With just three days to go before the UK Chancellor presents his budget for the 2001-2002 fiscal year, every day sees a flurry of stories about the possible contents of the famous red box next Wednesday.

Usually the Chancellor himself remains tight-lipped during this period, but yesterday Gordon Brown announced a £1bn tax break aimed at boosting business investment in some of Britain's poorest areas. During Treasury question time in the Commons he welcomed a new 25 per cent tax reduction on five-year investments in disadvantaged areas as a major innovation.

The scheme had already been discussed publicly, and had been first proposed by the Government's social investment task force. Yesterday's announcement made it definite. Finance companies specialising in helping deprived urban and rural areas will have to bid for tax relief on investments, under the scheme,

"The tax credit will be implemented in a new way by competition for resources with the tax credit awarded to the best bids for economic regeneration," said Mr Brown. "Taken together, all our new investment initiatives are estimated to increase investment in high unemployment areas by £1bn and to create thousands more jobs." He said the government wanted to create new flows of investment into areas where it was most needed.

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