Helen Sant, head of tax at KPMG in East Anglia, assesses the climate for inward investment in East Anglia

The region, and its jobs, depend on these investors continuing to regard the UK as a good place to invest. UK tax and regulatory competitiveness are key to the region’s future success in this arena.

The recently announced reductions in the rate of Corporation Tax are good news here. The rate will be reduced from 28% to 27% from April 1, 2011, and then to 26% in 2012, 25% in 2013, and 24% in 2014. This could put the UK at the same level of tax as the Netherlands, and significantly lower than France, Germany, Luxembourg, Italy and Spain.

The Chancellor has, in part, paid for these reductions by reducing the tax reliefs available on capital expenditure, for example machinery used in a business. The current rates of relief, of 20% for most assets and 10 per cent for longer life assets, will be reduced to 18% and 8% respectively. These reductions come into effect a year later than the Corporation Tax reductions, from April 1, 2012, so companies will get a lower tax year in 2011/12 before these changes start to bite.

The losers here will be companies with high levels of investment in assets and low profitability; for example, the hotel industry. High-tech and innovative businesses, which can obtain 100% relief for spending on research and development, may be the winners, not suffering from loss of relief but getting the benefit of the rate reductions.

The main complaints about the UK tax regime are that it is too complex and too changeable and uncertain. Thus investors in the UK will be looking not just at the measures announced in this Budget, but what was said about the longer term policies and approach. Stability is very important; the announcement of corporation tax rates through to 2014/15 is a helpful step.

The reforms to the taxation of controlled foreign companies, which apply to UK groups with subsidiaries in lower tax jurisdictions, are now due to be enacted in 2012 after further consultation. Although this further extends a process which began in 2007, the delays have resulted from further consultation as business responded negatively to the original proposals.

The Government has also set out its proposals for improving the tax policymaking process.

These proposals allow for more consultation and scrutiny of proposed changes. This is welcome; much of the uncertainty and complexity is caused when government enacts new legislation which then later has to be amended as a result of representations from companies which are adversely affected.

The challenge for the Government will be to continue to offer a sufficiently stable and competitive tax regime to attract investment from foreign businesses to move to and stay in the region.