The main rate of corporation tax (applying to businesses with profits in excess of £1.5m) will be reduced from 28% to 26% with effect from 1 April 2011. The rate will then decrease by 1% per year until it reaches 23% with effect from 1 April 2014.

As announced in the June Budget 2010, the small companies rate of corporation tax (where profits are below £300,000) will be reduced from 21% to 20% with effect from 1 April 2011.

Comment: The decrease of the main rate by 2% (rather than the 1% announced in the June Budget in 2010) is a welcome boost to UK business.

From 6 April 2011, the Government will increase to £10 million the lifetime limit on capital gains qualifying for entrepreneurs' relief. This doubles the current £5 million of qualifying lifetime gains which are taxed at the lower 10% rate. Above this value, the CGT rate is 28%. Historic gains realised in previous tax years in excess of the value of the limit set in those years cannot retrospectively benefit from the new, more generous allowance. However, if you have used up your lifetime allowance previously, it appears that only the relief claimed in the past (up to £5 million) will be set against the new £10 million limit for future qualifying disposals. You will therefore have the balance available as an allowance going forward.

Comment: The Government has announced a very generous increase in the lifetime entrepreneurs' relief limit which will be welcomed by successful entrepreneurs. In fact the increase in the relief could end up saving an additional £900,000 in CGT, and double that for married couples and civil partners. The very high limits now make it imperative that shareholders ensure, wherever possible, that they will qualify. Without the relief a shareholder could pay up to £1.8 million of unnecessary CGT.

Entrepreneurs' relief was, of course, introduced in place of taper relief back in 2008. It is interesting that the level of gains qualifying for the 10% CGT rate has increased ten-fold in only three years. This begs the question of why taper relief was ever abolished in the first place, when the practical effect of entrepreneurs' relief for all but the very biggest gains is now very similar.

The EIS and VCT schemes are to be reformed subject to state aid approval. The rate of EIS income tax relief is to increase from 20% to 30% from April 2011. In addition, the annual EIS investment limit is to increase from £500,000 to £1,000,000 from April 2012. The qualifying company limits will also increase from 50 to 250 employees, gross assets from £7,000,000 to £15,000,000 and the annual investment limit for qualifying companies to £10,000,000 for EIS and VCT schemes from April 2012. Furthermore, the Government has announced a consultation to simplify the EIS rules by removing some restrictions for qualifying shares and types of investor.

Comment: As discussed in the Entrepreneurship Report which we co authored with the London Chamber of Commerce, entrepreneurs are keen to embrace the EIS scheme but it has been underused due to its complexity. The reforms announced today will be good news for entrepreneurs competing for finance.

The additional deduction for qualifying expenditure on research and development by small and medium sized enterprises will increase from 75% to 100% from April 2011, giving a total deduction of 200%. The rate will be increased by a further 25% to give a total deduction of 225% from 1 April 2012.

A moratorium on the application of new regulations for three years will apply to start-ups (to be identified as businesses commencing a trade, profession or vocation on or after the date that the moratorium begins) and micro-businesses already in existence. Micro-businesses will be able to voluntarily comply with the regulatory standards if they wish to.

The Government has announced a consultation to take place in 2011 on reforms to integrate the operation of income tax and NICs.

Comment: Whilst we wait to see the outcome of the consultation on the reform of the operation of income tax and NICs, any integration is likely to be complex and administratively burdensome.

The existing £30,000 annual charge will be increased to £50,000 for non-domiciled individuals who have been resident in the UK for twelve years or more and who wish to retain access to the remittance basis of taxation. The £30,000 charge will be retained for those who have been resident for at least seven years but less than twelve years.

In addition, non-domiciled individuals will be able to bring foreign income or capital gains into the UK tax-free for the purpose of commercial investment in UK businesses. Ordinarily such remittances of foreign income or capital gains would be taxable on entry to the UK.

Comment: Mr Osborne said in his Budget speech today that the increase in the "non-doms" charge will raise more than £200 million. Although a tiny sum in the context of the overall tax take, it still sounds unrealistic since it may not be that those who have been in the UK for 12 years currently paying the £30,000 charge will automatically pay £50,000. Some will simply leave the UK and others will not have sufficient offshore income or gains to justify paying the higher charge.

With regard to individuals being able to bring foreign income or capital gains into the UK tax-free where certain criteria are met, it will be interesting to see full details of the proposal. Many non-doms would very much like to bring in their foreign income or gains, whether for investment or other purposes, but are currently deterred from doing so because of the tax charges involved. The proposal sounds very pro-enterprise and could be an excellent tax incentive for wealthy non-doms to invest their overseas income and gains in UK plc. It will also go some way to compensating non-doms who have been in the UK for many years and will now be hit by the aforementioned £50,000 annual charge.

HMRC has listened to industry representations to reduce the rate of stamp duty land tax (SDLT) arising on bulk purchases of residential property, although we await more detail in the Finance Act 2011. Under the new rules, the rate of tax on a bulk purchase of residential properties will be determined by the "mean" consideration rather than the "aggregate" consideration. This is calculated by dividing the aggregate consideration by the number of residential properties. So if the mean consideration was less than £250,000, the SDLT arising would be 1% even if the total consideration was £100 million!

Comment: This is intended to kick start the residential sector (particularly in the context of the private rented sector) and is to be welcomed.

Predictably HMRC has clamped down on a specific avoidance scheme which utilised the so-called "alternative finance" reliefs in order to avoid SDLT (these structures involved sale and leaseback structures, often combined with "sub-sale" relief). The new rules broadly have effect from 24 March 2011 unless the "arrangements" were entered into before that date.

Comment: The clamping down on this kind of arrangement certainly means that the days of 'packaged' SDLT schemes is numbered.

A rather more unexpected announcement relates to the so-called SDLT "exchange" rules. Following HMRC guidance, the accepted practice has been that SDLT does not have to be accounted for on the VAT element of certain types of transaction, such as sale and leasebacks. So a person buying a property for 100 + VAT of 20, and who granted a leaseback to the vendor, would only account for SDLT on the VAT-exclusive amount of 100 (even though VAT, as a matter of fact, was paid). The new rule, with effect from 24 March, appears to reverse this treatment, meaning that SDLT will arise on the VAT inclusive amount actually paid (120 in the example above).

Comment: Those close to exchanging contracts where this may be relevant should push to exchange today, in order to fall within the old rules if possible.

HMRC has confirmed it will consult on plans to make it easier for property owners to convert commercial properties to residential use. This, together with the presumption in favour of sustainable development, forms the thrust of the Government's attempts to make pro-growth changes to the planning system.

Comment: This contrasts starkly with the Localism agenda aims of pushing powers and choice down to the lowest level possible. There are big legal challenges for the Government, and ultimately the property owners who have to put this into practice, to reconcile this change with a community's desire to retain certain commercial uses and to realise a share in the benefits of growth.

An informal consultation will occur after the Budget in relation to reducing the barriers for entry into the REITS regime. Other developments include enhanced capital allowances possibly being made available on investment in certain "enterprise zones" and the review into the SDLT first time buyer's relief will be announced in the autumn.

Comment: The REITs consultation is to be welcomed (particularly if HMRC ever want REITs to play a role in the residential sector).

The Government has published a programme intended to tackle areas of tax avoidance, beginning with the review of income tax losses and unauthorised unit trusts, consultation documents for which will be published in 2011. As part of the programme, the Government has set out circumstances in which it will be prepared to announce a change to tax law that has immediate effect, other than at the Budget. The full document “Tackling Tax Avoidance” can be viewed here.

The Government will consult in May 2011 on the extension of the Disclosure of Tax Avoidance Schemes (DOTAS) regime, in particular with regard to specific tax avoidance schemes for direct taxes. Refinements to the hallmarks to remove known loopholes will be implemented in 2011-2012.

Legislation is to be introduced with effect from 23 March 2011 to prevent groups of companies avoiding corporation tax on chargeable gains on the disposal of assets, by using complex arrangements that seek to exploit the “associated companies exception” to a de-grouping charge.

The Government is to introduce legislation in the Finance Bill 2012 to prevent relief from tax pursuant to a claim made under a UK double taxation treaty, where tax avoidance arrangements have been made in relation to the claim to avoid UK tax. Examples provided include UK residents who use tax avoidance schemes and overseas residents who enter into arrangements to obtain benefits under the UK’s double taxation treaties where they are not properly due.

The draft legislation published on 9 December 2010 in relation to disguised remuneration has been amended to include a number of exclusions, for example in relation to group company transactions and certain short-term loans. The legislation is intended to tackle third party arrangements which seek to avoid or defer the payment of income tax or National Insurance Contributions due on employment income (for example, employee benefit trusts) and is to be introduced in the Finance Bill 2011.

Comment: Whilst it will be useful to know in which circumstances the Government will shut down avoidance schemes, it will be interesting to see whether the Government’s proposed programme can avoid the creation of further complexity and uncertainty after years of increased anti-avoidance legislation. The amendments to the disguised remuneration legislation were widely expected in order for the new regime to work in practice.

The rate of inheritance tax is to be reduced from 40% to 36% for those leaving 10% or more of their estate to charity. The Government states that this will reduce the cost of giving to charity through bequests. The intention is that the benefit of the tax saving will be reflected in the bequests received by charities and not in payments to other beneficiaries.

Comment: It will be interesting to see full details of how the relief will work in practice. For example will it also reduce the tax rate on large gifts made shortly before death? For the very largest estates it may be a good reason to set up a family charitable trust to receive the legacy.

It is not clear what the Government means when it says that following today's announcement the cost of giving to charity through bequests will be reduced. You can already make bequests to charity free of inheritance tax on your death. There is currently no cost involved either to the estate or to the deceased's family in making bequests to charity.

The Government also seems to be suggesting that the charity rather than the other beneficiaries will receive the benefit of the 4% reduction in inheritance tax on the rest of the estate. It is clear that the Government wants to promote charitable giving which can only be a good thing. However, it remains to be seen whether this minor reduction in an estate's overall inheritance tax bill will have any significant impact.