Deloitte & Touche tax specialists consider how the Budget will help growing businesses.


10-04-2003

Measures to encourage enterprise and flexibility in the UK



'The Chancellor has built on existing measures to tackle barriers to growth and taken further steps to cut red tape for small businesses,' says George Atterbury, Tax Partner at Deloitte & Touche



There are at least 20 main tax reliefs

that benefit growing businesses, their owners and employees. All of these continue to be available and some have been enhanced. More growing businesses will qualify for special tax reliefs as a result of the Chancellor's proposed alignment of the definition of SMEs with that of the EU.



The Chancellor is proposing improvements in two particular areas; capital investment and fund raising:

- 100% first year allowances for information and communications technology will continue for a further year

- 40% first year allowances in respect of expenditure on plant and machinery will be available to a wider range of growing businesses

- the definition of research and development is being reviewed to broaden the impact of relief. The relief will be available to a wider range of companies and can result in substantial tax repayments from the Inland Revenue

- a consultative document has been issued to review the equity funding available to smaller businesses. This explores the options to enhance existing tax favoured investment schemes such as the Enterprise Investment scheme and Venture Capital Trust scheme.



'Whilst the Chancellor's Budget measures are welcomed their financial benefit is not likely to outweigh the increased burden of National Insurance which was raised this month,' says George Atterbury.



'Although the Chancellor has declared his intention to reduce Red Tape, it is likely that the volume of legislation necessary to implement these measures will increase the administrative burden on growing businesses. In the short term he should focus on communicating to the growing business community how they can take advantage of the existing reliefs available to them. In the long term what we need is a simplified and coherent package of reliefs, with a consistent eligibility criteria, that growing businesses can easily access,' concludes Atterbury.

ENDS



Notes to editors



For more information please contact George Atterbury on 01223 259543 or please access our website at www.deloitte.co.uk



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