In an inaugural Budget that held few surprises for entrepreneurs, Darling said changes to the capital gains tax regime will proceed as expected including the so-called entrepreneur’s relief for the first £1m of gains on business assets.
The theme to Darling’s announcement was stability. He said the Budget is responsible in that it will "secure stability in these times of global economic uncertainty”.
Darling promised to keep inflation and interest rates low, and maintain growth. However, he downgraded his forecast for Britain’s growth to between 1.75 per cent and 2.25 per cent in 2008.
Darling argued that the UK is still “one of the best places to do business”, noting that the nation has the lowest rate of corporation tax in the G7 and that the rate will drop to 28 per cent next month.
There was no mention of the fact that corporation tax for smaller companies will actually rise from 20 per cent to 22 per cent.
Before announcing the measures targeted towards entrepreneurial companies, Darling said he wanted to do more to support small- and medium-sized enterprises.
The government will provide another £60m in funds for the Small Firms Loan Guarantee Scheme, which will be extended to all small and medium companies.
The government plans to increase the amount of investment that qualifies under the Enterprise Investment Scheme and Venture Capital Trust Scheme from £400,000 to £500,000.
The limit for issuing options under the Enterprise Management Incentive Scheme will likewise increase from £100,000 to £120,000.
“I will also provide a capital fund of £12.5m to encourage more women entrepreneurs,” Darling added.
He also pledged to help small- and medium-sized enterprises win more business from the government, revealing that he’s “setting a goal” for smaller businesses to win “30 per cent of all public sector contracts in the next five years”.
Meanwhile, Ann Glover from Amadeus Capital Partners has been asked to look at other barriers to public sector contracts that can be removed.
Non-domiciled entrepreneurs will still have to pay an annual fee of £30,000 if they’ve been here for at least seven years. Darling said while the government welcomed “the contribution made by people born outside the UK", it is fair that they pay a “reasonable” charge for the right to be taxed differently.
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