Chancellor Alistair Darling delivered his first budget yesterday and began his speech by announcing that the British economy was growing at a faster rate than all other G7 countries and reinforced that ‘Britain was one of the best places in the world to do business‘.

The main announcements that affect UK business are outlined below.

Tax & National Insurance - The limits for the different classes of National Insurance Contributions (NICs) rise in line with inflation, with the lower profits limit for the Class 4 NICs paid by self-employed people up to £5,435 and the upper profits limit for Class 4 NICs rising to £40,040. A package of 20 tax simplification measures to help reduce red tape costs and simplify tax calculations was also announced and the enterprise management incentive tax relief scheme will increase from £100,000 to £120,000

VAT - From 1 April 2008, the VAT registration threshold will be increased from £64,000 to £67,000 and the deregistration threshold from £62,000 to £65,000, and from 1 June 2008, revised legislation will be introduced to extend the cooling-off period to six months.

Corporation Tax - The main rate of corporation tax (CT) is 28% for the 2008/09 financial year. However, there is a lower rate of 21% for small companies with taxable profits of less than £300,000. Legislation will be introduced in the Finance Bill 2008 to set the main rate of CT at 28% from 1 April 2009. There will also be a 2p cut in corporation tax for large companies, from 30p to 28p in the pound.

Capital Allowances - As announced in last year’s Budget, with effect from April 2008, capital allowances for general plant and machinery investment will be reduced from 25% to 20%. Also with effect from April 2008, capital allowances for longlife plant and machinery investment will be increased from 6% to 10%.

Capital Gains Tax - Originally announced in January this year, small and medium-sized businesses will be charged a rate of 10% Capital Gains Tax (CGT) for the first £1 million of gains. SFLG – There will be an extension of the Government’s Small Firms Loan Guarantee Scheme (SFLG) to include all businesses and an increase of £60 million in funding the scheme.

Public Sector Contracts – The Chancellor has introduced a goal for small firms to win 30% of all public sector business contracts in the next five years.

Female Entrepreneurs - there will be a £12.5m fund to help and encourage female entrepreneurs.

Cars - From 2010, new cars that emit less than 130g of CO2 emissions will pay no car tax in the first year. Those that buy the most polluting cars can expect to pay higher road tax in the first year. The increase in petrol duty will be capped at 2p this year but will be deferred until October. However, the Chancellor also announced a fuel duty increase of 0.5p per litre for ‘environmental reasons’, to take effect from 2010.

Staff – The expansion and improvement of the Train to Gain scheme was announced along with Skills Accounts to be launched by 2010 and £60 million extra funding for adult skills.

International Trade - Introduction from 2010 of an online system to help recovery of overseas VAT for UK businesses.