Tax Aid Is on the Cards as Brown Sets out to Woo Small Enterprise; BUSINESS & MANAGEMENT,FINANCIAL MAIL
Byline: ANDREW MOODY;RUTH SUNDERLAND
CHANCELLOR Gordon Brown is expected to signal new tax incentives for small businesses in his pre-Budget report next week.
He is likely to indicate tax changes to encourage people to start new businesses and to invest in them.
Top of the agenda could be a complete tax break on that part of a company's profit that is invested back in the business.
Among other measures being considered is a further cut in the small company corporation tax rate of 20%.
The statement to the Commons on Tuesday is likely to be the first clear indication that the government is shifting its policy priorities from education to enterprise.
It is believed the statement will reflect the 'enterprise, enterprise, enterprise' mission heralded by Trade Secretary Peter Mandelson at the Labour conference.
The Federation of Small Businesses said yesterday it welcomed any moves to give owners of small b u s i n e s s e s i n c e n t i v e s t o invest in their companies. Spokesman David Hands said: 'People who put money into their own business should benefit from tax breaks. At present there are more tax advantages for small business owners to invest in someone else's business than in their own.' Under current rules, small business owners must pay tax on profits they invest back into their businesses to buy plant and machinery, computer equipment, or even a car.
The only break available is the depreciation set against tax on equipment purchases before the end of a company's tax year. Until next July, the first-year capital allowance for depreciation is 40%, but in the remaining years it is just 25%. In Northern Ireland the first-year allowance is 50%. …