Stephen Byers, the Secretary of State for Trade and Industry, will today present details of the plans for corporate venturing, as the practice is known.
Mr Brown said that next year's Finance Bill will contain a tax incentive under which companies that invest in small higher-risk trading companies will receive up-front corporation tax relief at 20 per cent. In addition, corporate venturers who reinvest gains made from new ventures will be able to defer payment of capital gains tax on such gains - a move that the Chancellor said would make hundreds of millions of pounds available for investment.
The CBI, which tomorrow publishes with the Department of Trade and Industry and National Westminster Bank a report aimed at promoting corporate venturing, welcomed the idea, saying that it would prompt organisations to think of a technique that was much more widely adopted in the United States and elsewhere.
However, Alison Bye of the organisation's small business unit pointed out that the Chancellor's proposals appeared to be limited to the acquisition of stakes in smaller businesses, whereas the report would point out how companies were taking a variety of approaches to working together.
While pharmaceutical and high-technology companies were among those who said they were active in this area, others were often involved without realising that their initiatives amounted to corporate venturing.
Alex Henderson, tax partner with the accountants Arthur Andersen, said the move complemented what was now a range of measures directed at growing businesses.
He added he was particularly pleased with the concept of reinvestment relief from capital gains tax, saying it was likely to make the idea "more attractive for companies".
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