Once again, the Chancellor described the Budget statement, delivered on 21 March, as one of prudence.

The main beneficiaries, as last year, are lower income families and poor pensioners.For practitioners, the most interesting changes are in the area of capital gains tax (CGT ).

In 1998, the basis on which individuals and trusts are charged to CGT was changed.

Indexation of the acquisition cost was abolished and replaced by taper relief.

This relief works by a reduction of the chargeable gain depending upon whether or not the asset is a business asset and how long it has been held.

In the case of a non-business asset, the taper relief, over a period of ten years, reduces the chargeable gain by 40%, giving an eventual CGT rate, in the case of a 40% taxpayer, of 24%.

These arrangements are unchanged.However, the Chancellor in his pre-Budget report of November 1999 indicated that, in relation to business assets, he was considering shortening the period over which the taper relief would operate and was also considering relaxing the conditions for shares to qualify as business assets.

The changes announced in the Budget are more generous than most practitioners had anticipated.For business assets, taper relief will now operate for disposals on or after 6 April 2000 to apply a CGT rate for a higher rate taxpayer of 10% after a holding period of just four years, with interim rates of 35% after one year, 30% after two years and 20% after three years.

The classes of share which will qualify as business assets are expanded, so that all shares in unquoted trading companies and all shareholdings of employees (full or part-time) in quoted trading companies, together with shareholdings of at least 5% by non-employees in quoted trading companies, will benefit.

However, the qualifying period will now only apply for holding periods from 6 April 1998, so that the full reduction will only be available, in the case of a business asset held on 6 April 1998, for disposals on or after 6 April 2002.Investment in start-ups and small trading companies is to be encouraged through a number of initiatives.

Welcome is a reduction in the minimum period for which investments must be held under the Enterprise Investment Scheme and Venture Capital Trust scheme in order to qualify for income tax relief.

For shares issued on or after 6 April 2000, the minimum holding period will be reduced from five to three years.The Corporate Venturing Scheme will be introduced from 1 April 2000, and the Budget announced further improvements to it.

The scheme is designed to encourage UK companies to undertake corporate venturing in small, higher risk trading companies.

The scheme will allow investor companies to obtain corporation tax relief at 20% on amounts invested in new ordinary shares held for at least three years, and to defer tax on any gain made on corporate venturing investments which are reinvested in another shareholding under the scheme.

The requirement that only investments in unquoted companies can qualify has been modified by providing that relief will not be withdrawn if the company subsequently becomes quoted provided that, at the time of the investment, there were no arrangements for a quotation to proceed.There are important changes concerning the taxation of groups of companies.

In ICI v Colmer, the European Court of Justice found that the group relief rules were contrary to Community law.

In response, the Revenue made an announcement that group relief would be available where the existence of a group or consortium was established through companies resident in the European Union or the European Economic Area.

The changes announced in the Budget go much further by completely removing any restriction on the residence of companies through which a group or consortium is established.

In addition, group relief will also be extended to UK branches of overseas companies.Similar changes are to be made to the taxation of chargeable gains within groups.

From 1 April 2000, it will be possible to transfer an asset on a no gain/no loss basis between two UK resident companies with a common non-resident parent company.

An important change is a proposed measure, long sought by practitioners, to introduce what is effectively group relief for capital losses.

Two members of a group of companies may jointly elect that an asset which has been disposed of outside the group by one of them may be treated as if it had been transferred between them immediately before that disposal.

This will enable losses and gains on assets within the group to be matched in a single company without actually having to transfer the assets.Controversial changes to the UK's system of double taxation relief for companies were announced.

Under these proposals, the use of so-called mixer companies would be curtailed.

A multinational forms a sub-holding company in a tax haven which mixes the income received from high-tax and low-tax foreign subsidiaries and then pays on the mixed fund by way of dividend to the holding company in the UK.

Such a mechanism averages out the foreign rates of tax for tax credit purposes.

The Inland Revenue originally estimated that the changes would yield around £100 million in a full year, but industry is said to estimate the cost at many billions.

It seems likely that this will be the most controversial aspect of the Budget, and it would not be surprising if the government modified or even withdrew the proposal altogether.As anticipated, the Chancellor again raised stamp duty for sales of assets (other than shares) of more than £250,000.

The new rates are 3% for prices over £250,000 but not exceeding £500,000 and 4% for prices over £500,000.

The old rates will apply where contracts were exchanged on or before Budget Day, or where completion occurs before 28 March.

Transfers of intellectual property will be exempt from stamp duty for instruments executed on or after 28 March and new stamp duty reliefs for transfers and leases of land and buildings to Registered Social Landlords will be introduced.