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Tuesday, 27 November, 2001, 18:25 GMT
Chancellor pushes investment agenda
Large firms will benefit from the R&D tax credit
Chancellor Gordon Brown has promised more tax cuts and new funds to boost investment in UK industry.

Continuing a theme raised in previous Budgets, Mr Brown used this year's pre-Budget report to announce a series of measures that he says will create a more entrepreneurial spirit and boost research and development in UK industry.

The biggest gainers of Mr Brown's new measure could be big companies that spend heavily on research and development.

In his last Budget, Mr Brown had announced a Research and Development Tax Credit for smaller firms. The scheme will now be extended to large companies, as part of next year's Finance Bill.

More significant in the long-term, though, could be an overhaul of the UK's planning laws.

Later this week Stephen Byers, in charge of local government, will outline new laws to improve the "flexibility, speed and responsiveness of the land use system".

Long-lasting inquiries like that into the fifth terminal at Heathrow, which took four years to complete, could become a thing of the past.

This would remove a lot of risk and red tape for businesses planning large-scale investments.

'More favourable tax regime' than US

Cutting capital gains tax is another favourite of the chancellor, and this time he announced further reductions - to 20% for business assets held for more than one year, and 10% for business assets held for two years.

Mr Brown believes that this will make the UK's overall capital gains tax regime "more favourable to enterprise than that of the United States".

The chancellor added another pleaser for the business crowd, extending a scheme that allows firms to reward key employees with share options at preferential tax terms.

Now firms with assets of up to 30m can make use of the share option scheme, which the chancellor says will "double" its reach.

Mr Brown also raised the prospect of another micro-measure to help small companies. Firms that want to move their payroll and tax systems online could be given cash help. The Treasury will open consultations on the scheme.

Plans to cut taxes and simplify the VAT regime for small businesses were reconfirmed.

Investment funds extended

Tax measures will be used to boost investments in small companies, especially in deprived areas, and yet again Mr Brown promised to do this by modifying schemes announced previously.

Locally-based investment funds - targeted to tackle regional inequalities by giving risk capital to small companies - will be boosted by a new 50m fund.

Areas suffering under high unemployment will get extra support through a Community Investment Tax Credit, with one pound of government money to complement every four pounds of private investments - 25m for every 100m invested.

Level playing field for hauliers

Competition from foreign haulage firms has been a longstanding complaint of UK hauliers, and the chancellor has now promised to act.

Mr Brown proposes to impose a charge of 5 a day or 750 a year on all lorries using Britain's motorways.

At the same time the government would reduce the vehicle excise duty for UK-registered lorries, to ensure they pay no more tax overall.

Foreign lorries could be charged by the day, while UK lorries would pay an annual fee. The system could be introduced within two years of getting parliamentary approval.

A possible alternative is a high-tech satellite tracking system, to charge lorries by distance travelled - although such a system is years away.

The Freight Transport Association welcomed the proposals, but said the charges represented small beer for foreign hauliers.

Stephen Joseph, executive director of Transport 2000, said it was "a step towards civilising lorries and making them pay their full cost to the environment."

The government's pre-Budget report will be on 27 Novewmber






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