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Budget 2011: business tax changes to boost enterprise

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The Chancellor has introduced extra tax reliefs for innovative firms and entrepreneurs.

The rate of the SME research and development tax credit is to increase to 200 per cent as from April 2011. The plan is that it will rise further, to 225 per cent, as from April 2012.

The R&D credit scheme is also to undergo a simplification process. This will include removing the PAYE/NIC cap on the amount of payable credit that can be claimed and removing the minimum expenditure rules.

To encourage entrepreneurs, as from 6 April 2011, the lifetime limit on capital gains that qualify for the 10 per cent rate under the Entrepreneurs’ Relief scheme is going up from £5 million to £10 million.

The rate of income tax relief available under the Enterprise Investment Scheme (EIS) climbs from 20 per cent to 30 per cent from April 2011. The Government is planning to double the amount that any individual can invest through the EIS, to increase the size of company that can qualify for the investment, and to raise the limit on the amount that can be put into a company by 400 per cent.

While to help improve levels of business investment, the limit on the capital allowances short life assets election is to be extended from four to eight years.