12 March 1999

Business start rate now 10%

A new 10% starting rate of corporation tax will take effect from April next year. This will apply to small businesses with companies making taxable profits up to £50,000 benefiting from the change. The first £10,000 of profits will be taxed at 10%. The tax rate increases over the next £40,000 of profits, so at £50,000 the full rate is charged.

Cuts of 1% in the small companies rate (those with profits up to £300,000) and the main rate of corporation tax announced last year, come into effect on Apr 1 this year and will stand at 20% and 30%, respectively. This provides more incentive for small businesses which keep profits in the business to incorporate.

First year capital allowances on plant and machinery will continue at 40% until July 2000.

as the Chancellor previously indicated.