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NEWS Tuesday, 9 March, 1999, 19:04 GMT
Company tax cut to all-time low
UK companies will see corporation tax cut by 1% to 30% from 1 April in an effort to boost UK business - the lowest rate in history.

The rate of tax for small companies will fall from 21% to 20%, benefiting 350,000 companies.

The starting rate of tax will be cut to 10% from 1 April 2000 for those small companies that make profits of up to 10,000. There will also be tax breaks for companies making up to 50,000.

This is also the lowest ever starting rate for small businesses in the history of UK corporation tax.

The chancellor pledged that business tax rates would not rise for the life of this Parliament.

Investment help

Entrepreneurs and small businesses will benefit from the Budget
Companies will receive research and development support in the form of a new tax credit.

The government will underwrite almost a third of research and development costs for small businesses at a cost of 150m a year.

The government is setting aside another 325m to allow small and medium-sized companies to write off 40% of all they invest in the next year.

Tax cuts for key personnel in high-risk businesses are being introduced. Targeted cuts will be made for those people who are prepared to move from secure jobs to become entrepreneurs. The new enterprise management incentive will allow the award of equity worth up to 100,000.

The film industry will also receive a boost with further tax breaks for films made in the UK.

Improving competition

The government plans to crack down on monopolies and improve competition among UK businesses.

It will start by launching an investigation into competition in the airport and water industries.

The Office of Fair Trading, the UK competition watchdog, will also be given 20% more money to elminate cartels and monopolies.

The Financial Services Authority, the industry regulator, will publish league tables of costs and charges in savings, insurance and pension products to guarantee a better deal for consumers and to avoid the mis-selling scandals that have rocked the industry in the past.

The moves come as Stephen Byers, the trade and industry secretary, prepares to unveil a host of new measures to improve the competitiveness of UK business on Wednesday.

Help for small business

A Small Business Service, devoted to helping small companies, will also be established.

The service will offer loan guarantees, support innovation, advise on electronic commerce and provide an automated payroll service to help new small companies starting out.

Bank and building societies will also have to publish a list of mortgage prices for customers.

Capital gains tax is also being reformed, with personal thresholds increased.

The first 7,100 will be free of capital gains tax for individuals from April - exempting more than 10,000 people from paying the tax.

Business blow

However, the chancellor has risked the wrath of the business community, by introducing a tax on the use of energy.

The tax will lead to a rise in fuel bills, adding to business costs and hitting profits.

Landfill taxes will also be increased by 1 a tonne - raising firm's expenses.

However, to offset higher energy taxes, employers will pay lower national insurance contributions for workers.

Nevertheless self employed workers will have to pay a higher rate of national insurance.

Your Views - Have your say on the Budget

Gordon Brown announces the cut in corporation tax
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