Chancellor Gordon Brown yesterday delivered his 2001 Budget speech.
The detail has yet to be released, but the pre-election Budget has
generally received a cautious welcome from business commentators.
The details have yet to be announced, but the Chancellor
announced that there will be tax relief to companies for the costs
of intellectual property, goodwill and other intangible assets.
VAT
For small businesses earning up to £54,000 per year, VAT will be
abolished. Those with a turnover up to £100,000 will have VAT set
at a lower flat rate. SMEs with a turnover up to £600,000 will be
consulted on a simplified scheme. Corporate tax rates remain
unchanged.
Tax relief on R&D
Gordon Brown announced a consultation on tax credit for research
and development in large companies.
Share options
Companies that offer shares to employees will benefit from tax
breaks, to help them attract and retain staff. Companies with
assets of less than £15 million can now, under the Enterprise
Management Investment (EMI) scheme (introduced last year) grant
share options to the value of £3 million (up from £1.5 million).
Previously, only 15 employees in any company could be eligible for
the scheme, but there is now no limitation.
However, despite industry hopes, national insurance on share
options will remain. All staff can now benefit from share schemes
provided the options conform with the EMI scheme. Capital gains
rate for employees in all types of company was reduced from 40p to
10p.
On-line gaming
Off-shore internet bookmakers will lose their competitive
advantage over high street rivals. The success of off-shore
internet gambling services was cited by Gordon Brown as the reason
for his decision to abolish gambling duty from 1st January
2002.
Stephen D. Lane, partner and head of corporate tax with Masons,
the law firm behind OUT-LAW.COM, said of the Budget:
“The Chancellor yesterday announced several
measures which will assist in the development of information and
technology companies. The limit for the Enterprise Management
Incentive scheme has increased to £3m in value of shares under
option. A new tax credit is to be introduced to encourage increased
expenditure on research and development and innovation by large
firms. There will be a new regime for giving tax relief for the
cost of intellectual property, goodwill and other intangible
assets. We wait with interest to see the technical detail behind
the proposals outlined.”
