Chancellor George Osborne has said that he will simply the "spaghetti bowl" of UK tax law to cut the burden on businesses and attract foreign investment.

Osborne is setting up an Office for Tax Simplification to streamline the 11,000-page tax code and is calling for a permanent body to ease the complication of taxes and make life easier for firms.

The new body will initially conduct two reviews - streamlining 400 tax reliefs, allowances and exemptions and simplifying the tax system for small businesses, including a simpler alternative to the controversial IR35 code.

It will advise ministers where the tax system is too complex but it will not look at tax credits, which Mr Osborne said he considered part of the benefits system.

The Chancellor said that Britain had "one of the most complex and opaque tax codes in the world".

Chancellor George Osborne delivered his first Budget yesterday, which he said was "tough but also fair". He also called it "unavoidable".

Mr Osborne said the Government's target was to reduce the structural deficit so that it is balanced by 2015. He announced that economic growth for 2010 had been revised down from 1.3% to 1.2%, and growth in 2011 was predicted to be 2.3%, down from the 2.6% that was forecast by the newly established Office for Budget Responsibility. He concluded that the Budget was a "progressive" one, had "paid the debts of a failed past" and was one that meant "prosperity for all".

Responding to the Budget, acting leader for Labour, Harriet Harman, said the Government had "revised the growth for next year down because of the harm that [George Osborne's] Budget does". She said the Chancellor had not been honest on the issue of jobs, and said that tens of thousands of people would be out of work as a result.

Some of the key points affecting business and enterprise from the Emergency Budget 2010 include:

Help for business

·         An increase of £200 million to the Enterprise Finance Guarantee (EFG) scheme, which will support small business lending of up to £700 million to 31 March 2011. Additionally, lenders participating in the EFG will have a target of 20 working days in which to process loans.

·         The creation of a £37.5 million Enterprise Capital Fund, which will provide equity finance for small businesses. The Government will provide £25 million and private investors will provide the rest. The Fund will form part of a programme of Enterprise Capital Funds.

·         The abolition of Regional Development Agencies (RDAs), which will be replaced by local enterprise partnerships. These will lead local economic and business development.

·         A Green Paper on business finance, which will look at the finance options available to all businesses and how to improve access to finance for credit-worthy businesses. This will be published before Parliament's summer recess.

·         A scheme to help support employment and growth for new businesses. New businesses that start up in specific areas of the UK (not including London, the East of England and the South East) will be exempt from paying the first £5,000 of Class 1 employer National Insurance Contributions due in the first 12 months of employment. This applies to the first ten employees taken on in the business' first year. The scheme is expected to start no later than September 2010 and new businesses that start up now and meet specific criteria should be eligible for the scheme.

·         The creation of a Regional Growth Fund in 2011 that will provide support to English regions that rely heavily on public sector employment and encourage support and growth in the private sector. Governments in Scotland, Northern Ireland and Wales are expected to provide similar schemes.

·         The publishing of central Government tenders online and free of charge from the end of 2010.

Banks

·         A levy on banks will be introduced from January 2011, affecting UK-based banks, building societies and UK operations of foreign banks. The levy will be based on banks' balance sheets and is expected to raise £2 billion a year.

Tax and VAT

·         Mr Osborne announced that next year the corporation tax rate will be cut by 1% to 27%, then by 1% each year for the following three years, to a record low of 24%. The rate for small companies will reduce from 21% to 20% next year.

·         The standard rate of VAT will increase by 2.5% from 17.5% to 20% from 4 January 2011. The zero rate for food and books remains in place while the lower rate for other items, such as fuel and power, remains at 5%. In line with the VAT increase, the higher rate of insurance premium tax will increase from 17.5% to 20% while the standard rate will increase to 6% from 5%.

·         The Chancellor confirmed the Government's commitment to increasing personal income tax allowance, which will be raised by £1,000 (from £6,475 to £7,475) from April 2011. Additionally, the higher rate income tax threshold (40%) will remain frozen at £37,400 until 2013/14.

·         The Chancellor has lowered the threshold for the Annual Investment Allowance for qualifying capital expenditure on plant and machinery to £25,000 from April 2012. This had been increased in April 2010 by the previous Chancellor to £100,000.

·         The Government has announced plans to bring in legislation that will provide a temporary increase in the level of small business rate relief for one year from October 2010. This will provide relief to eligible businesses in premises with a rateable value of up to £6,000 and tapering relief to £12,000.

·         The Capital Gains Tax (CGT) rate for basic rate taxpayers will remain at 18%. The CGT rate for higher rate taxpayers increased to 28% from yesterday, and the CGT relief for entrepreneurs is extended to the first £5 million of lifetime gains, up from £2 million.

·         The 50p tax on landlines proposed by the previous Government as part of plans to raise money to fund investment in super-fast broadband will not go ahead.

·         A review of IR35 and small business tax, details of which will be published by the Government in due course.

·         The main capital allowances rate for plant and machinery will reduce from 20% to 18% while the special rate will reduce from 10% to 8% from April 2012.

The Chancellor has confirmed that the Financial Services Authority (FSA) will cease to exist in its current form and will instead have its powers shared among several other authorities. Mr Osborne made his announcement during his Mansion House speech, confirming that the Bank of England (BoE) will become the chief regulator of banks, building societies and other financial firms. A consumer protection agency will also be created to regulate independent financial advisers. The FSA will cease to exist in 2012.

The Governor of the BoE has indicated that the Monetary Policy Committee (MPC) would consider raising interest rates in a bid to keep down inflation. Speaking at the Mansion House, Mervyn King said the MPC "recognised that there is a significant chance that inflation may turn out to be above target" and monetary tightening would "most likely to be through a raise in Bank Rate".

As announced on 8 March, the £20 banknote carrying the portrait of composer Sir Edward Elgar is to be finally withdrawn from circulation from 30 June this year – less than ten weeks away. The note has been gradually replaced by the Adam Smith £20 which was introduced in 2007. After that date the note will no longer have ‘legal tender’ status. The note is less likely to be accepted in payment, or in change, in retail outlets after this date.

For several months from the end of June most banks, building societies and Post Offices should accept Elgar £20 notes for deposit to customer accounts and for other customer transactions. Agreeing to exchange the notes for non-customers is at the discretion of the individual institution. The Bank of England will always give value for these notes (and all other banknotes the Bank has issued).

Since 8 March the number of Elgar banknotes in circulation is estimated to have fallen from 150 million (£3bn) to 125 million (£2.5bn). There are approximately 1.5 billion £20 notes (£30bn) in circulation.

The Office for National Statistics (ONS) has revealed that UK Gross Domestic Product (GDP) grew by 0.4% in the fourth quarter of 2009, faster than the previous estimate of 0.3%. The revision is due to growth in distribution, transport and business services. Overall, GDP in 2009 shrank by 4.9% year on year, compared to an increase of 0.5% in 2008.

The three main parties have all published their 2010 election manifestos, which set out their plans to help small businesses, entrepreneurs and the business support sector. Both the Liberal Democrats and the Conservatives have pledged to scrap Labour's controversial increase to National Insurance (NI).

Regional Development Agencies (RDAs) are also in the firing line from both the Lib Dems and the Tories. The Lib Dems are looking to regionalise business funding and support, as well as scrap RDAs that do not have local support.  The Conservatives, on the other hand, would like to replace RDAs with local enterprise partnerships that are led by business.

Here's an overview of the key policies for each main party:

Liberal Democrats

According to their manifesto, the Lib Dems "believe in the value of entrepreneurship and enterprise" and want to develop a level playing field for all businesses. They plan to:

• Reform RDAs so that they focus solely on economic development, which will allow "substantial budget reductions". Where a RDA has strong local support, it can continue but if not then the RDA will be scrapped and its functions taken over by the local authority.
• Reform business rates and create a system where rates are based on site values rather than rental values.
• Break up the banks and build up "diverse local and regional sources of business finance". This would include the establishment of Local Enterprise Funds, which would allow local investors to put money into growing businesses in their region. Regional Stock Exchanges would allow businesses to access equity without the "heavy regulatory requirements of a London listing".
• Reduce the burden of red tape for businesses, by assessing the cost and effectiveness of regulations before they are introduced. They also want to work towards a principle of 'one in, one out' for new rules.
• Set up a 'Creative Enterprise Fund', which will offer training, mentoring and small grants and loans to creative start ups.
• Reverse Labour's plans for an increase in NI, which it calls "a tax on jobs".

Labour

Labour's manifesto sets out a "commitment to support enterprise", which covers their plans to:

• Agree lending targets for banks who lend to UK businesses, start ups and entrepreneurs. There will be consequences for bankers' pay if these targets are not met.
• Provide funding via the UK Finance for Growth Fund, which will provide £4 billion worth of funding to businesses looking to develop and grow. The Growth Capital Fund will focus on small businesses that need capital of between £2 and £10 million. The Innovation Investment Fund will focus on high-tech firms.
• Continue HM Revenue & Customs' (HMRC) Time to Pay Scheme, provide a one-year holiday from business rates for small businesses and double the Entrepreneurs Relief lifetime limit to £2 million.
• Reduce the costs of regulation for businesses by more than £6 billion by 2015, through the simplification of red tape and regulation.
• Extend the Enterprise Finance Guarantee Scheme until March 2011.
• Continue support for RDAs. Labour claims that scrapping RDAs, and the specialised local support they provide, would put regional economic recovery at risk.
• Establish the 'Be the Boss' enterprise scheme, which will assist returning service personnel who want to set up their own business with loans and grants.

Conservative

Small businesses are "especially important" to the UK's economic recovery, according to the Conservatives, who pledge to:

• Reduce the number of forms needed to register a new business and create a 'one-click' registration model, in order to make Britain one of the fastest places in the world to start a business. This includes ending restrictions on social tenants starting a business from home.
• Cut Corporation Tax rates. They plan to cut the main rate from 28p to 25p and the small companies' rate from 22p to 20p.
• Publish all Government tender documents worth over £100,000 online on the Supply2Gov website, as well as open up ICT contracts to small firms by breaking up large projects into smaller ones.
• Give councils and businesses the power to form their own business-led, local enterprise partnerships instead of RDAs.
• Create more diverse sources of funding for small businesses, including the National Loan Guarantee Scheme.
• Scrap Labour's planned NI increase and raise the secondary threshold at which employers start paying NI by £21 per week. The Conservatives also pledge to exempt all businesses starting in the first two years of their Government from Employers' NI contributions on the first ten employees they hire.
• Establish a Work for Yourself programme, which will consist of a network of business mentors and offer loans to entrepreneurs and the self-employed. Business support would be provided through specialist organisations, such as the Prince's Trust and the Bright Ideas Trust.

The Conservatives have said that they will not repeal the IR35 tax rules for freelancers, despite announcing that the current rules need overhauling earlier this month. A Tory spokesperson said that repealing the IR35 rule altogether is not viable and could result in "unintended consequences". Earlier this month, the Tory Business Minister Mark Prisk had said the party would look at overhauling the tax legislation in place for the self-employed, which was welcomed by the Professional Contractors Group (PCG).