Budget 2002: What it means for you

Chancellor Gordon Brown today unveiled a budget that he billed as encouraging both fairness and enterprise for all.

The biggest headline shift was a one per cent rise in national insurance for employees, employers and the self-employed. However, the widely anticipated tax-rises to pay for NHS improvements will hit individuals harder than business.

No specific measures were unveiled to target the high-tech sector, but a number of new incentives were offered to encourage small businesses and company R&D.

Indeed the Chancellor opened his speech by outlining business entrepreneurship as the first of the country's three most pressing challenges: "Our task is to address, through reform... the challenge of enterprise: with new incentives to raise investment and reward entrepreneurship."

To address this Brown announced a £400m windfall for companies to encourage research and development. This will come in the form of a tax credit set at 25 per cent.

He will also cut tax on the sale of large amounts of shares and promised to "modernise" the tax treatment of intellectual property, delivering savings of £200m a year.

For small businesses he cut tax rats to 20p in the pound from 21p. And the smallest businesses - with revenues beneath £10,000 per year - will become completely exempt from tax.

In addition the chancellor responded to demands for more help to get companies' payroll systems online.

Over the next eight years the government will set aside £420m to give direct help to small firms going online, aiming for universal "e-filing" of tax.

However, the headline figure of one penny on insurance will actually increase companies' National Insurance bill by eight per cent, making it much more expensive to hire staff.

Leader of the Conservatives Ian Duncan-Smith immediately hit back at the Chancellor's speech, saying that with the National Insurance rises Brown had "opened people's wallets whilst he closed his mind to reform".

On the proposals for businesses, Duncan-Smith said the Tories would scrutinise very carefully the proposals for small business tax and tax credits for R&D: "We have learnt to study the 'red book' very hard. We all remember the infamous IR35 legislation which was never actually announced by the Chancellor, but had such an enormous effect."

Andrew Bell, technology tax partner for accountants PwC, said the changes were broadly good for businesses, with changes to R&D and intellectual property tax rules directly benefiting tech companies.

However, he cautioned: "The penny on National Insurance could make quite a difference to technology companies where the bulk of the costs are in staff. It might well make employers more wary of getting new staff, or paying people more."