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A Conservative government would scrap Labours planned annual investment allowance in favour of tax mitigation schemes such as lowering the rate of tax for all small and medium-sized enterprises, George Osborne has announced.
In a meeting to discuss the rise in capital gains tax, the shadow chancellor told of group which included company directors of SMEs and entrepreneurs, that he would not follow the governments plan to increase the rate of corporation tax on small companies from 20 per cent to 21 per cent next April and then to 22 per cent in 2009.
In the wake of the governments proposed £50,000 allowance, the Tories indicated that they believe businesses would prefer lower headline taxes rather than having to apply to retain cash they had spent on new equipment.
Anita Monteith, head of the tax faculty at the Institute of Chartered Accountants of England and Wales told the Telegraph: "It looks to us like they are trying to save money. The old first year allowance was available to anybody and it was not limited.
"If you are a very small business and only spend a modest amount its effectively a 100 per cent allowance. But most businesses of any size would spend more than that."
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