Chancellor George Osborne has announced tax measures designed to favour business as part of the 2011 budget report.
Subject to European approval, small business research and development tax credits will rise to 200 percent in 2011 from the current 175 percent. In 2012, the credit will rise to 225 percent, giving companies more than twice as much off their tax bills as they spend on research and development. In addition, a £370m rate holiday for small business will be extended to 2012.
The budget, announced by George Osborne, will include tax measures to favour business. Photo credit: The Prime Minister's Office/Flickr
"Let it be heard around the world... Britain is open for business," Osborne said.
The Green Investment Bank will be given an extra £2bn worth of funding, in an effort to encourage start-ups and small businesses. "Britain has lost ground in the world's economy and needs to catch up," Osborne said.
Corporation tax will be cut by two percent from April — instead of a planned one percent — to 26 percent. There will be a fall in corporation tax by one percent in each of the three years following 2011.
"This is not a tax-raising budget, but nor can we afford a give-away," Osborne said. "Our taxes should be efficient and support growth."
To offset the fall in corporation tax, the bank levy will be increased from January 2012.
Britain has lost ground in the world's economy and needs to catch up. – George Osborne
The government will fund more technical colleges — up from 12 to at least 24 — to increase workforce skills, said Osborne. In addition, up to 50,000 additional apprenticeships and 100,000 work placements for young people will be created.
In addition, the government will create 'enterprise zones' across England, with fewer planning rules, super-fast broadband and tax breaks for businesses. The government will create 11 zones in areas including London, Greater Manchester, Solihull, Leeds and Liverpool, with a further 10 to be announced in the summer.
Technology trade association Intellect said many of the Budget announcements will help the IT sector, but there was no overt recognition of the importance of technology to the economy.
"We welcome many of the measures in the budget and feel there are a number of positive announcements for the technology sector," said Tom Wills-Sandford, Intellect's deputy director general. "However, we were surprised that ICT and digital technology was not acknowledged as one of the key drivers of growth and urge the government to recognise that technology underpins all the growth industries named in the budget."
Recruitment agency Robert Half Technology said research and development tax credits would help small businesses.
"Many companies who put initiatives on hold during the downturn now have additional incentive to get new projects underway," the company said. "In addition, tax breaks will free up cash flow and allow companies to again invest in their IT infrastructure."
In 2010, Osborne announced massive cuts to public sector spending, as part of the Comprehensive Spending Review.