Budget 2008: Taxes on business

The charge on non-domiciled residents in the UK will go ahead as planned, Alistair Darling has said.

The chancellor had come under pressure from business representatives to abandon a £30,000-a-year charge on the estimated 100,000 to 200,000 people living in Britain who have financial interests abroad but do not pay UK taxes on those assets.

In his Budget statement on Wednesday, Darling said the scheme for those residents who have lived in Britain for longer than seven years would go ahead from April.

In an attempt to bring stability to the new system, he said there would be no changes to the regime in this Parliament or the next.

He dismissed Conservative plans, widely thought to have inspired the government's non-dom charge, saying the Tory proposal "did not add up" and could not have raised £2.8bn as claimed.

Darling also rejected calls from business groups and the Opposition for a further cut in the corporation tax, saying only that it would fall from 30 per cent to 28 per cent next month as planned.

"Our goal is, and will continue to be, to maintain the most competitive corporation tax rate of any major economy," he said.

Neither will the already-announced capital gains tax reforms, bringing in a flat-rate 18 per cent, be delayed beyond next month, he said, although the "entrepreneurs' relief" proposed in January will also be introduced.

He told MPs the government was committed to maintaining a "stable business tax system that remains responsive to business needs and internationally competitive".

Small and medium-sized firms will be helped with a £60m increase in the Small Firms Loan Guarantee Scheme, he said, which will also be extended to cover medium-sized businesses.

Business secretary John Hutton would consult on "radical new proposals" to limit the amount of red tape that can be imposed by Whitehall, Darling said.

And the government will set up a £12.5m fund to encourage more women entrepreneurs.

Darling announced a review to look at the possibility of setting a target for small and medium-sized enterprises to win 30 per cent of all public sector business in the next five years.

The chancellor was also delivering the government's new enterprise strategy, aimed at boosting entrepreneurialism.

The Department for Business, Enterprise and Regulatory Reform said its 10-year plan aims to make the UK "the most enterprising economy in the world and the best place to start and grow a business".