Chancellor unveils new tax breaks for managers

Chancellor Gordon Brown today announced a new £1 million tax break on share options for managers of small businesses in a bid to encourage risk takers.Mr Brown, addressing the CBI conference in Birmingham, said that under the new enterprise management scheme up to 10 key employees in growing companies would be allowed share options of up to £100,000 free of income tax.

Chancellor Gordon Brown today announced a new £1 million tax break on share options for managers of small businesses in a bid to encourage risk takers.Mr Brown, addressing the CBI conference in Birmingham, said that under the new enterprise management scheme up to 10 key employees in growing companies would be allowed share options of up to £100,000 free of income tax.

"I want to send the message to entrepreneurs in every part of the country that this Government means enterprise and the rewards of enterprise are open to all," he said.

The Chancellor said the offer was intended to reward "dynamic managers" and help them to build up their businesses.

The cost to the Treasury will be £40 million in lost revenue in the first year alone.

The Chancellor said it would form part of a package to be unveiled in his pre-Budget report next week aimed at extending the enterprise culture created by the Tories under Margaret Thatcher in the 1980s.

"I want a Britain where there is work for all, and enterprise is open to all," he said.

"People say that in the 1980s Mrs Thatcher created an enterprising society, but we must always be looking for new ways to promote enterprise and open enterprise up to all.

"Indeed we must do far better than we have in the past. We must go beyond what was achieved in the 1980s. And we must give the many, not just the few, the chance to turn their ideas into profitable businesses, to start firms, create jobs and win business for Britain."

He said that the pre-Budget report would also include proposals for the modernisation of capital and product markets, the encouragement of innovation and the building of a modern skills base.

The Chancellor coupled his offer of tax breaks for entrepreneurs with a fresh call for wage restraint.

He warned that, with the Bank of England legally bound to hit the Government's inflation target, above inflation pay awards would simply lead to higher interest rates.

"Because, under the new system, unacceptably high wage rises that are not justified by economy wide improvements, will not lead to higher inflation but to higher interest rates, it is in no one's interest if today's pay rise threatens to become tomorrow's mortgage and interest rate rises," he said.

At the same time, he also made clear that he would not bow to union demands to use his Budget surplus to go on a spending spree to boost public services such as health and education.

Reacting to the Chancellor's CBI speech, TUC general secretary John Monks said: "We will have to look at the details but at first sight the preferential treatment only for executives runs contrary to the need for all employees to be treated fairly.

"If there are to be tax breaks they should be available to all employees who contribute to the success of an enterprise. There should be no 'them and us'."

Adding to the debate shadow chancellor Francis Maude said: "Labour give with one hand but take much more with the other.

"It is typical of Gordon Brown to try to get a headline from a token pro-enterprise policy when the whole thrust of his programme has been to pile new taxes and regulations on to business.

"On Monday, Labour trumpet a £40 million tax break for entrepreneur. But just two days later they will be supporting a £475 million tax grab on the self-employed.

"Business is paying £30 billion more in tax thanks to Gordon Brown and Labour's new red tape is costing firms £5 billion a year," he added.

On other issues, Mr Brown rejected suggestions that the Government was cooling towards the idea of signing up to the single European currency.

"Our policy is absolutely consistent with the one I outlined in 1997. It is a strategy of prepare and then decide.

"We will subject the euro to the five economic tests we have laid down ... I believe we should be applauded for our consistency," he said.

Mr Brown said that in his pre-Budget statement next week, he would be focusing on what he called "the productivity agenda".

"I will be putting forward a number of proposals ... about how we can modernise our capital markets, our labour markets, and our product markets," said Mr Brown.