Budget 2003 (2): Enterprise and innovation

The Chancellor maintained the theme he has been developing in speeches in the past few months of promoting enterprise and innovation in all parts of the country.

The message was that the Government is committed to building an enterprise society in which people from all backgrounds and all areas of the country consider and act upon enterprise opportunities.

In the enterprise and innovation section of the Budget 2003, the Chancellor announced the following measures which were claimed would support small and growing businesses.

• proposals to improve access to finance for small businesses, with consultation on Small Business Investment Companies, reforms to the Enterprise Investment Scheme and Venture Capital Trust provisions, and tax relief for the incidental costs incurred by SMEs in issuing equity;
  
• deregulatory reforms to ease the regulatory burden on small businesses, including amendment of the Company Law definition of small- and medium-sized companies to increase the turnover thresholds to the maxima allowed under EU law. Legislation to establish the new definitions will be introduced as soon as the new EU maxima come into force later this year;
  
• further steps to promote research and development (R&D) activity by business, including reforms to improve the operation of existing R&D tax credits to ensure that more businesses can claim a wider range of relief and consultation on improving the definition of R&D used for the tax credits to ensure it remains consistent with technological developments and is competitive internationally;
  
• further proposals to help businesses in Enterprise Areas, including a second community development venture fund and enhanced capital allowances. From 10 April, all non-residential transactions in these areas are exempt from stamp duty, regardless of value;
  
• £16 million over two years to fund Enterprise Advisers to work alongside headteachers in around 1,000 secondary schools in deprived areas to ensure that pupils gain better knowledge of business and enterprise. Budget 2003 also launches a new £1 million Enterprise Promotion Fund, to support private and voluntary sector creativity in promoting enterprise;
  
• a new package of training support for SMEs delivered in partnership with high street banks. The package will use the banks’ existing communication networks to stimulate demand for advice and training. It will be managed by a steering group chaired by Sue Brownson, chief executive of Blue Bell BMW;
  
• a series of measures to simplify VAT for businesses, including an increase in the registration threshold in line with inflation and extension of the optional flat rate and annual accounting schemes to businesses with turnover of up to £150,000;
  
• further reform of capital gains tax (CGT), including an extension of business assets taper relief to improve access to let property for unincorporated traders and new measures to simplify the CGT regime;
  
• a package of measures to simplify employee share schemes, to enable and encourage companies to offer them to their employees;
  
• an extension of 100 per cent first year capital allowances for small businesses investing in information and communication technologies for one further year; and
  
• the abolition of Petroleum Revenue Tax from 1 January 2004 on all new third party tariffing business under contracts completed on, or after, Budget day relating to the use of pipelines and other infrastructure in the UK and on its continental shelf.