The 2004 Budget and business

Following Chancellor Gordon Brown's Budget 2004, here are the key points affecting the UK's small businesses.

Dividends paid from small businesses to individual shareholders will be taxed at a rate of 19%.

The zero rate and also the reduced rates will continue on retained profits.

Firms with turnovers under £58,000, up from £56,000, will not have to register for VAT from 1 April.

From 1 April an additional 13,000 businesses will be eligible to benefit from simplified VAT accounting.

Investment allowances for the smallest businesses will be increased from 40% to 50%, initially for one year.

There will be a freeze on rates of corporation tax and capital gains tax. Rates are also frozen on: air passenger duties; stamp duty and vehicle excise duty for cars and lorries.

Discussions are underway to remove the working tax credit from payroll so that the Inland Revenue pays the working tax credit directly to employees.

Rates on the aggregates levy (a tax on sand, gravel and rock that has been imported from abroad or quarried in the UK) will be frozen.

Climate change levy rates will be frozen, and the 80% discounts extended to a greater number of businesses.

For the next two years, Venture Capital Trust (VCT) investors will get tax relief for investments of up to £200,000 a year at the higher rate of 40p, rather than the lower rate of 20p.

From next year, tax incentives will be offered to firms located and investing in 2000 areas classified as 'enterprise zones'.

Inheritance tax rates, levied at 40%, will be frozen and the starting point raised fractionally from £255,000 to £263,000. Now, 95% of estates will pay no inheritance tax at all.

There will be a 1p rise on a pint of beer, a 4p rise on a bottle of wine. Duties on spirits, cider and sparkling wine will stay the same.

Cigarettes are going up by 8p a packet, in line with inflation.

The annual rise in fuel duty will be frozen for six months. The duty rise for unleaded petrol will be 1.9p per litre rise with a similar rise on diesel expected in September.

The Treasury will review progress on joining the euro in the next Budget.

For the full Budget 2004 speech, visit: http://www.hm-treasury.gov.uk/budget/budget_04/bud_bud04_speech.cfm.