Chancellor pledges to 'lock in economic stability'
In his 2004 Budget, Chancellor Gordon Brown unveiled a number of key
changes which are set to have an impact on businesses.
One key announcement for small business owners was the closure of a ‘tax
loophole’ by the introduction of a 19% tax on ‘distributed
profits’, in a move which could affect many small incorporated businesses.
Meanwhile, the Chancellor has increased investment incentives for small
firms, by raising the investment allowance from 40% to 50%, for one year
initially.
Venture Capital Trusts will enjoy 40% tax relief on investments of up
to £200,000, and the threshold for VAT registration has been raised
to £58,000. Around 13,000 more businesses will also qualify for
simplified VAT accounting.
Corporation tax and capital gains tax will remain frozen, as will the
climate change levy; the Chancellor has increased the number of businesses
to which the 80% discounts will apply. The inheritance tax threshold will
also rise to £263,000.
The Chancellor announced that pensions savings will be capped at a single
lifetime allowance of £1.5m from April 2006.
The Chancellor also confirmed a forthcoming merger of the Inland Revenue
with HM Customs & Excise, with more than 10,000 staff positions to
be shed by 2008. The Department for Work and Pensions is also set for
a 5% budget reduction and the loss of 30,000 staff.
Overall, Mr Brown gave optimistic predictions for the UK economy, forecasting
that business investment will increase by a little under 4% this year,
while manufacturing output will rise by just under 2%, and imports and
exports will grow by more than 5%.
An assessment of the five economic tests for euro entry was carried forward
to the next Budget.
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