Struggling small businesses will be given tax relief worth hundreds of millions of pounds a year through the extension of a scheme allowing them to claim back tax paid on previous years’ profits.

The Treasury said the carry-back scheme would help an expected 140,000 businesses, which will claim an average £4,000. The scheme allows companies to reclaim taxes on profits made in the past three years by “carrying back” losses of up to £50,000.

Small companies will apply through the Government’s Payment Support Service to receive rebates paid in profitable years.

The measure, which was intended to ease the cashflow of loss-making small businesses, was announced initially in the Pre-Budget Report last year but was extended by a year until November 2010.

But the move was criticised in some quarters for failing to go far enough in addressing the difficulties faced by small businesses.

David Frost, director-general of the British Chambers of Commerce, said: “The extension to loss carry-back will help with smaller business cashflow. But the Chancellor could have considered increasing the £50,000 carry-back limit to really make a difference.”

Chas Roy-Chowdhury, head of tax at the Association of Certified Chartered Accountants, said that the measure helped to ease liquidity for small companies. “The announcement about carry-back is very helpful because cash is king in this financial crisis,” he said.

The scheme is run through the Government’s Payment Support Service.

Small businesses also stand to benefit from the doubling of capital allowance, which is the tax relief for investment in machinery and plants, to 40 per cent. The change, along with the cut in VAT last year, will save companies about £75,000 on every £1 million of investment.

Tom McGinness, at KPMG in London, said: “Smaller businesses are ultimately looking to survive in today’s difficult climate. Their needs are simple — more cash and less administration. Overall, the Chancellor’s Budget could have done more to stimulate growth and confidence.”

John Wright, national chairman of the Federation of Small Businesses, said: “In what has been the most crucial Budget in decades, the FSB is disappointed that small businesses have been largely ignored.

“With a quarter of business failures due to late payment and an average £38,000 owed to small businesses at any one time, Companies House should have been given more powers to name, shame and fine companies that fail to pay on time. The Government has missed an opportunity to save thousands of businesses and the jobs they create.”

The FSB also criticised the rise in fuel duty, arguing it would hurt any “roaddependent” smaller businesses.

The UK’s high-tech industries are in line for £750 million of Government investment from a Strategic Investment Fund launched in the Budget.

The fund is designed to support advanced industrial projects of strategic importance, focusing on emerging technologies and projects that are important to particular regions in the fields of advanced manufacturing, digital media and biotechnology.

A third of the funding will be earmarked specifically for low-carbon projects, with the Technology Strategy Board receiving £50 million and UK Trade and Investments getting £10 million.

The Technology Strategy Board cash will be used to increase its capacity to support innovation in areas that have high potential to drive future growth, such as low-carbon technologies, advanced manufacturing and the life sciences.

The funds come as fears grow that the UK may lose out to other countries in attracting research and development projects due to lack of investment.

Jonathan Kestenbaum, chief executive of the National Endowment for Science, Technology and the Arts (Nesta), welcomed the fund, adding that he hoped it would regenerate the UK economy, give a new vibrancy to the country’s technology market and bring about deep and lasting change.

However, the £750 million fund falls short of the £1 billion Nesta had called for this week.

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