Archive - 2003 Budget: Budget highlights Capital taxes Duties Value added tax National insurance 2003/04 tax calendar Business tax Investment incentives Income tax Pensions Company cars Other measures announced

Gordon Brown demonstrated the significance he attaches to the contribution made by small and medium-sized businesses to the UK's economic strength by announcing a series of measures he claimed will simplify the tax regime and reduce regulation.

In the Chancellor's seventh Budget Speech he identified enterprise, innovation and flexibility as the engines of growth. He argued that the fortunes of the nation hinge on sustained investment and unveiled improvements to the research and development tax credit. More businesses will qualify for 100% first year capital allowances for investment in IT made before April 2004 and there has been an extension of the Small Firms Loan Guarantee scheme.

Mr Brown also revealed plans for Small Business Investment Companies, along the lines of the United States model, to act as a new source of private capital for the SME community.

The threshold for businesses to become eligible for the 40% initial capital allowance will be raised to £20 million in the summer, while the VAT registration threshold increases from 10 April 2003 to £56,000. Further VAT reforms should also reduce paperwork, while many more firms will avoid automatic fines for late payment.

The freezing of vehicle excise duty on lorries and the postponement of any duty-driven increase in fuel costs will be welcomed throughout the commercial sector. Corporation tax, capital gains tax, and insurance premium tax rates and the climate change levy are unchanged, although the landfill tax will rise from £14 per tonne in 2003/04 to £15 in 2004/05 and to £18 per tonne in 2005/06.

Mr Brown signalled an intensification of the war on red tape, enlisting the CBI and Institute of Directors to help identify unnecessary regulation. He also promised to improve smaller firms' ability to compete for Government contracts. The Government will also contribute to costs where employers allow time off for training and study.

The Chancellor also introduced a range of measures designed to boost the creation of small businesses throughout the country including 2,000 designated enterprise areas.

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