Osborne's break for Dragon's Den firms with 10% tax to lure entrepreneurs

Lure: George Osborne believes his tax reforms will make Britain 'one of the most competitive places in the world'

Lure: George Osborne believes his tax reforms will make Britain 'one of the most competitive places in the world'

George Osborne is to introduce a lower ten per cent ‘Dragons’ Den’ tax and reduce levies on overseas profits to lure businesses back to Britain.

The Chancellor told the Commons that profits from patents and intellectual property would be taxed at just ten per cent to encourage entrepreneurs.

It could benefit men and women similar to those on the BBC show Dragons’ Den, who pitch their ideas at business brains in a bid for investment.

Mr Osborne’s announcement came as official growth forecasts for the economy this year were upgraded and the number of expected job losses in the public sector scaled back.

But Britain’s new tax and spending watchdog reported that the future for the economy was ‘inherently uncertain’ and recovery would be slower than after previous recessions.

Predictions from the independent Office for Budget Responsibility include:
■ Economic growth of 1.8 per cent this year, 2.1 per cent next year and of 2.6 in 2012, meaning no double-dip recession;
■ Public sector job cuts of 330,000 over the next four years, not the 490,000 previously expected;
■ A house price crash of 3.1 per cent next year, taking £5,000 off the value of the average home;
■ An increase in the state pension age to 70.

Mr Osborne said it was vital to make Britain more competitive to help the private sector drive recovery.

In his annual autumn statement to MPs, he said the ‘most significant programme of corporate tax reforms for a generation’ would create in Britain the most attractive business tax regime in the G20.

GlaxoSmithKline, Britain’s biggest drugmaker, responded to the ten per cent tax on profits from patents by saying it would spend more than £500million to boost research and development, creating 1,000 jobs.

In demand: George Osborne's tax initiative is expected to appeal to the type of business brains and investors who feature on the popular BBC programme Dragon's Den

In demand: George Osborne's tax initiative is expected to appeal to the type of business brains and investors who feature on the popular BBC programme Dragon's Den

Mr Osborne also pledged to tear up so-called ‘controlled foreign companies’ rules which have prompted an exodus of companies including advertising agency WPP to relocate abroad. Labour used the rules to tax profits made overseas by British-based companies.

Under Mr Osborne’s reforms, multinational companies will get an effective corporation tax rate of just eight per cent for offshore financing operations.

The Treasury also published a timetable for tax reform to cut corporation tax from 28 per cent to 24 per cent by 2014.

The main rate will be cut to 27 per cent in the spring, to 26 per cent in 2010, 25 per cent in 2013 and 24 per cent in 2014.

The 24 per cent headline rate would be the lowest in Britain’s history, he said. ‘In a world in which increasingly companies can choose where to locate, these tax measures will make us one of the most competitive places in the world.’

Legislation to create a so-called ‘patent box’ – introducing a lower rate of corporation tax on profits generated from UK-owned intellectual property and patents – will be brought forward next year.

The measure is designed to encourage investment in research and development.

Mr Osborne said: ‘For a long time we have argued that we should increase the incentives to innovate and develop new products in this country.

‘So to encourage hi-tech businesses to invest in the UK and to create high-value jobs here, we can confirm that we will introduce from April 2013 a lower ten per cent corporate tax rate on profits from newly-commercialised patents.’

A broader, cross-government review to ‘remove barriers to growth’ will consider moves to make the planning system and employment law more business-friendly. It will also examine how to support exporters and inward investors.

‘Brick by brick we will remove the barriers that are holding Britain back,’ he added.

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