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INVESTMENT INCENTIVES The Chancellor also announced a reduction in the rate of employers national insurance with effect from April 2001 by 0.5 per cent to 11.7 per cent. This will be coupled to a new tax on energy use, the details of which are not yet available, but the overall effect on industry of the two measures is expected to be neutral. The Chancellor has also announced an increase in the Class 4 national insurance levy on the self employed to bring them more into line with employees. The new rate will be 7 per cent on profits up to £27,820 and this will take effect from April 2000. CAPITAL ALLOWANCES FOR SMALL AND MEDIUM SIZE BUSINESSES The enhanced first year capital allowance of 40 per cent for small and medium size businesses, that is available until 1 July 1999, will continue to apply for expenditure incurred up to 1 July 2000. For small and medium size businesses buying assets for use primarily in Northern Ireland, the rate of first year allowance is 100 per cent for the period to 11 May 2002. CAPITAL GAINS OF COMPANIES The Chancellor has decided to make no changes to the taxation of capital gains for companies, following last year's consultation process. The Chancellor has however indicated that he would like to consider whether or not changes do need to be made particularly in relation to capital gains tax groups, and the gains arising from the sale of subsidiary companies. The Treasury and Inland Revenue will be entering into discussions with interested parties with a view to possible changes. SELF ASSESSMENT FOR COMPANIES Self Assessment for companies is being introduced for accounting periods ending on or after 1 July 1999. One of the changes for larger companies is the collection of taxation by quarterly installment payments. Today's amendment will allow for fixed penalties to be levied, where a company fails to provide the Inland Revenue with information regarding a failure to make a quarterly payment on account, or has made an inadequate payment. All other changes announced for Self Assessment, including the abolition of Advance Corporation Tax apply as previously reported.
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