Budget 2008 The UK government will temporarily increase Small Firms Loans Guarantee funds by 20 per cent in the next year to help small businesses (SMBs) that are feeling the pinch from tightening credit conditions.

In his first budget speech, Chancellor Alistair Darling said in the Commons at lunchtime today that the government would also relax age restrictions on firms to enable SMBs to take better advantage of its loan scheme.

The Chancellor also announced the creation of a committee that will advise on the practicality of setting a goal for SMEs to win 30 per cent of all public sector business in the next five years.

Darling said the government was simplifying taxes for small companies. He reiterated that corporation tax would fall to 28 per cent from next April.

He added that changes to the capital gains tax (CGT) system, which will also come into being next month, "will benefit over 80,000 businesses".

In January, Darling confirmed that the government had backtracked on its stance over CGT by slashing the rate on profits below £1m made by anyone flogging all or part of a business to 10 per cent. ®

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