But there was no change to plans to introduce IR35, which could lead to increased costs for many IT consultants.

One of the main planks of Mr Brown's package of incentives is a new rate of capital gains tax, to be introduced from 6 April.

The rate for business assets will be reduced from 40% to 35% after one year.

After two years it will be 30%, after three years 20% and after four years it will be 10%.

Help for investors

Mr Brown said he also wanted to help investors owning between 5 - 25% of a business, who currently did not benefit from the 10p rate.

The 10p rate would now apply to all investments above 5% held for four or more years.

Holdings in unquoted companies would benefit from the same rate.

"With both the lowest corporate tax rates for businesses ever and the lowest ever capital gains tax rates for long-term investors, Britain is now the place for companies to start, to invest, to grow and to expand," said Mr Brown.

Tax 'a deterrent'

John Whiting, tax partner with PricewaterhouseCoopers, told BBC News Online these reforms were recognition that capital gains tax could be a deterrent to investment.

The chancellor introduced measures to help manufacturing

Mr Brown said he was keen to help small businesses, another 100,000 of which had started up since 1997.

The 40% capital allowances for small and medium-sized businesses - introduced in the 1997 Budget - would be made permanent.

"This will be of special help to manufacturing companies," said Mr Brown.

"Manufacturing will derive further benefit from the �150m pounds I am allocating to our new research and development tax credit, introduced on 6 April, to finance 30% of their R and D costs."

Mr Brown added that he was also raising the threshhold for inheritance tax, from �231,000 to �234,000. This would mean 96% of people would now be exempt from the tax.

To encourage the next generation of entrepreneurs, Mr Brown announced the creation of a partnership with the Confederation of British Industry, the Institute of Directors and the Chambers of Commerce.

Two new enterprise funds would target business loans and management scholarships to high unemployment areas.

'Closed circle'

"Stage by stage we are moving from the Britain where enterprise was a closed circle for the few, to a Britain where enterprise will be open to all," said Mr Brown.

He also announced measures concerning employee shareholdings.

High-tech firms recruiting essential personnel would be able to offer share option incentives of �100,000 for up to 15 employees.

And there would be consultation with the financial secretary to the Treasury to find a solution to the treatment of share options in unapproved schemes.

The British Chambers of Commerce was reserving judgement on the Budget.

Director-general Chris Humphries commented: ''While changes to capital gains tax and the introduction of permanent capital allowances will encourage business investment, Gordon Brown has not done enough to ease the increasing tax and administrative burden on business.

Concern over sterling

"There must remain a concern that the Chancellor's �4bn additional spending may force interest rates and sterling even higher."

The Federation of Small Businesses was disappointed that the chancellor did not offer more for unincorporated businesses.

"Only a handful of businesses will be able to take advantage of the low rates of corporation tax and employee share ownership schemes," said Brendan Burns, the FSBs policy unit chairman.

"We had urged the chancellor to boost the unincorporated sector by allowing them to retain some profits in their business, which would have benefited the majority of the small firms sector.

"After three years of building up a �14bn war chest on the backs of taxpayers, entrepreneurs expected to see him offer them some reward."