The Treasury has confirmed that tax credits for research and development in bigger companies will be introduced by the government after consultation.

Officials made clear that the government remains committed to introducing the scheme and said they would find a way of ensuring it complied with EU law.

However, business said it was disappointed at the deferral of a series of other tax breaks, such as those proposed on the disposal of substantial shareholdings.

Small business welcomed plans to simplify tax returns, which will see them being able to file a simple profit and loss sheet to the Inland Revenue.