BUDGET HIGHLIGHTS

New 10p income tax rate now introduced

New starter corporation tax rate of 10 per cent for profits up to £10,000, to start in 2000

Extended measures for promoting investment

Increased stamp duty on transfers of property over £250,000

No major restructuring of capital gains tax or inheritance tax

Budget triggers dawn of knowledge economy

Britain's future hinges on its ability to become a knowledge economy. This is the clear message to the country's small employers from Gordon Brown's 1999 Budget.

The Chancellor said that the future growth of the economy would be determined by the effort employers expend on nurturing talent. For this reason, the Budget will enable employers to contribute tax-free to Individual Learning Accounts, which will encourage staff to develop their skills.

Gordon Brown also boosted the entrepreneurial sector by announcing cuts in corporate tax rates, both for large businesses and small. This means that from April 2000 small firms making profits of up to £10,000 will have a starting rate of corporation tax of 10 per cent.

The Budget has also introduced the incentive for employees to buy shares from pre-tax income, a move that is intended to strengthen the bond between workers and their employers.

In terms of meeting the cost of the beneficial Budget measures, the Chancellor increased Insurance Premium Tax by 25 per cent, taking the rate to 5 per cent. Not a tax increase that will grab the headlines, perhaps, but if you pay £500 per year in premiums, it means your tax bill will go from £20 to £25. Businesses will in future also be penalized for excessive use of energy resources.

The administrative burden attaching to a number of the Chancellor's other measures is also expected to impact on the small business community.

Conservative leader William Hague pointed out the Chancellor's previous use of 'stealth' taxes on business and suggested that the detail of his announcements might yet reveal increased tax burdens. Mr. Brown remains bullish about the overall prospects of the business community, but he inevitably remains at the mercy of general economic conditions - any sudden downturn in the global economy could quickly render Mr. Brown's best efforts irrelevant.