Brown unveils tax-cuts for startups

Changes in rules for share options aimed to encourage small high-tech startups

Chancellor Gordon Brown on Tuesday announced a tax-relief package aimed at encouraging Internet startups, with industry observers saying the tax cuts were much as expected.

The most significant moves, from the point of view of small startups looking to reward employees with stock options in lieu of high salaries, are reductions in the taxes levied on those options. Brown said up to 15 key employees will be able to receive tax-friendly share options of up to £100,000 in value, up from the 10 employee limit he announced in November's pre-budget statement.

All shareholders will be subject to a lower 10 percent capital gains tax rate.

For business assets, capital gains taxes will go from 40 percent to 35 percent after one year, 30 percent after two years, 20 percent after three years and 10 percent after four years.

"These are the biggest [moves]... to increase employee shareholding this country has ever seen," Brown said, touting the tax package as moving Britain towards "a shareholding democracy".

Brown also announced a £100 reduction for businesses filing tax and VAT over the Internet; a £50 reduction had been predicted. "We are determined to lead in e-commerce and the Internet," he said.

More details to follow.

If Gordon Brown has got his e-commerce friendly Budget right, every person reading this will shortly be contributing to the online revolution. Go with Tony Westbrook to read the news comment.

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