BVCA: Expand Entrepreneurs Relief, EIS, VCTs etc

 

And interesting submission from the the BVCA came through today, calling on the government to expand Entrepreneurs Relief as one of several measures to boost the financing of SMEs and start-ups. Here's a quick summary, with a link to the full submission below: 

 

Supporting entrepreneurs: Reform Entrepreneurs Relief (ER) by removing the 5% holding test to allow smaller employee shareholders to qualify, and removing the employment requirement so that ER is deployed as an incentive to High Net Worth Individuals (HNWs).  We would also encourage broader participation in company share schemes to help foster a savings culture.

Financing SMEs: We urgently need policy to encourage institutional investors to invest in the asset class. We have proposed EIS Funds where institutional investors could combine with retail investors to help raise larger funds as well as similar proposals for VCTs. In addition, we have also proposed a form of credit easing for VC funds to assist them with new punitive capital standards. By allowing tax relief for both classes of investors, this would be a significant fillip for the financing of growth companies.

Competitiveness – Tax: We continue to support the downward trend in corporate taxation and the commitment to creating a culture of certainty and stability is the right approach. Capital Gains Tax remains high by international standards but again we welcome the commitment to retain the current regime for the life of this parliament. 

Competitiveness – Regulation: Our principle concern remains regulation from the EU notably the Institutions for Occupational Requirement Provisions Directive (IORP). This would apply Solvency II standards to pension funds which has the potential to massively impair their ability to invest in real economy assets like venture capital and private equity. We have also suggested reforms to the Tier 1 Entrepreneurs Visa, which is not working as it should. Domestically, we welcome the Government’s focus on needless regulations and look forward to the conclusion of the “Red Tape Challenge”.

Mark Florman, Chief Executive of the BVCA, said:  “While we continue to support the Government’s position on deficit reduction, there are several affordable ways to further support and incentivise investment in entrepreneurs, start-ups and SMEs. In particular we would like to see measures introduced to encourage wider participation by institutional investors in venture capital. 

“More broadly, we have also urged the need for certainty in the tax and regulatory regime. BVCA members have around £72bn of dry powder to commit, much of it in the UK. While the investment climate may be hindered by uncertainty, London can remain competitive if economic, tax and regulatory stability is maintained.” 

The full BVCA Budget Submission 2012 can be downloaded here.

 

Add comment
Log in or register to post comments
Group: Budget discussion group
Find out all about the political compromises, technical background and taxation wishlists that surround the chancellor's Budget statement.