According to an article in The Times, one of David Cameron’s policy groups has urged the party to review the 19 per cent tax rate imposed by Labour on small business dividends in 2004.
The 19 per cent tax rate was a controversial measure, known as IR591*, when the Chancellor U-turned on a previous zero-rate concession amid claims that small businesses were taking advantage of the scheme and using it 'as a tax loophole simply to avoid paying tax and national insurance by reclassifying income as dividends' (Small Business Minister, Nigel Griffiths - May 2004).
Now, according to the Times, the Economic Competitiveness Policy Group, led by John Redwood, said the tax needed 'simplification or flattening' to attract more investment in small and medium-sized enterprises (SMEs).
A Conservative spokesman said that the idea would be considered but was not party policy.
The tax plans are one of a series of proposals made by Mr Redwood’s group yesterday to encourage trade and investment links between India and the UK.
*For further information News on IR591 - Shout99.
Full article: Tories may woo Indian investors with SME tax cuts - Times, Aug 30, 2006.
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