With Government borrowing at an all-time high, the Chancellor had little real scope for manoeuvre. He recognised, however, that a revival of the economy is essential. To this end, he introduced a number of measures to help businesses and those who invest in them.

Recognising the contribution the Enterprise Investment Scheme (EIS) makes to start-up companies and to those looking to expand, he increased the income tax relief given to investors from 20% to 30% for shares issued on or after 6 April 2011. From 6 April 2012, the amount that an individual can invest each year will increase from £500,000 to £1 million and the amount that a company can raise using EIS will increase from £2 million in a twelve month period to £10 million.

He also changed the Capital Gains Tax (CGT) rules so that gains of up to £10 million on the disposal of the whole or part of a business or of shares in a company in which the shareholder is a director or employee and holds more than 5% of the shares will now potentially attract the low 10% CGT rate.

The main corporation tax rate - applicable to companies with profits in excess of £1.5 million will fall from 28% to 26% from 1 April 2011 and then by 1% each following 1 April to 23% from 1 April 2014. The reduction will also affect the rate of corporation tax paid by companies with profits between £300,000 and £1.5 million. The small companies’ rate, applying to companies with profits below £300,000 will be 20% from 1 April.

Small and medium sized enterprises engaging in research and development (R&D) can currently claim a deduction of £175 for each £100 of their qualifying R&D expenditure against their corporation tax, but this will increase for expenditure incurred on or after 1 April 2011 to £200 and from 1 April 2012 to £225 for each £100 spent.

There was also a hint that the 50% income tax rate may be dropped in 2013. If you are currently exposed to this rate, there may be ways to avoid it if you are prepared to lock funds up for two years.

If you think that any of these reliefs may be of assistance to you or to your business, you should seek specialist advice – as always with tax, the rules are far from straightforward.

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