Budget 2008: Tax changes

The chancellor used yesterday's Budget speech to outline a series of tax changes affecting small businesses.

From April 1st 2008, the rate of corporation tax paid by small businesses, with profits up to £300,000, will increase to 21 per cent - rising to 22 per cent the following year.

Other businesses will be subject to a corporation tax rate of 28 per cent from April 2009.

The chancellor confirmed plans to introduce a single 18 per cent rate of capital gains tax; however, small business owners will benefit from the introduction of "entrepreneur's relief" - a ten per cent rate for the first £1 million of lifetime gains.

Plans to increase small business owners' access to finance were also announced - with changes planned that will affect the government's small firms loan guarantee (SFLG).

SFLG eligibility will be extended to benefit more small businesses and an additional £60 million will be added to the fund this year.

A number of tax simplification measures were also introduced - to ease the administrative burden on small business owners and simplify VAT rules.

Efforts will also be made to simplify corporation tax calculations.