The Chancellor has moved to discourage small businesses from incorporating for tax reasons by increasing the tax they will pay on profits up to £300,000, from 19% to 20% with effect from 1 April 2007. The small companies rate will further increase 21% in 2008 and to 22% in 2009.

In contrast the corporation tax rates for large companies, broadly those with profits of £1,500,000, are set to be cut form 30% to 28% from 1 April 2008.

Internet link: Budget notes