March 21, 2012, 12:03 PM GMT
By Ben Rooney
After last year’s introduction of changes to the Venture Capital Trusts (VCT), the Enterprise Investment Scheme (EIS), and the introduction of a new Seed Enterprise Investment Scheme (SEIS), the tech sector is not expecting a huge amount out of the budget, although any move to make investment easier would be widely welcomed,
One idea that has been trailed, some sort of National Insurance holiday for SMEs, met with general agreement as it would make employing new staff easier.
The Start Up
Azeem Azhar, CEO of PeerIndex, a start up that quantifies a user’s online influence, called for “anything that starts to unlock capital—particularly from successfully exiting entrepreneurs.
“I’d love to see an extension of the EIS scheme to provide additional incentives to entrepreneurs and investors to recycle their capital. For example, a model where people exiting from an EIS investment get immediate 100% relief on gains on any capital recycled within a year of the exit.”
Eileen Burbidge of VC Passion Capital, and behind the White Bear Yard incubator, urged reform in the way the government invests in start ups, saying it should route through the existing venture capital industry, rather than using public bodies.
“We’d like to see continued support for ECFs (enterprise capital funds, of which Passion Capital is one), whereby the Government, instead of investing via Regional Growth Funds or other structures, invests in qualified fund managers who make the investments. Currently the budget allows for two ECFs per year (maximum of £25 million each, so £50 million allocated in the budget).”
Nicholas Lovell whose influential Gamesbrief covers the games industry, called for ways to make crowd-funding easier.
“It seems crazy that anyone can spend money in a casino but only the very wealthy are allowed to invest in activities that are true the wealth creators in our economy.
“The games industry trade body UKIE has put forward proposals to make crowd-funding work on an investment basis. I am not that hopeful, but I think it could be good for the creative industries and solve a reasonable amount of the high-risk funding gap.”
Ed Denny, a tax lawyer at London law firm Norton Rose said larger companies were looking for more details on R&D credits.
“Technology companies will be looking forward to the publication of the consultation on the new R&D credit for large companies and will be interested to see if there is any update on the proposed Patent Box.”
“The new R&D credit was announced in the Autumn Statement and is intended to be an “above the line” credit that can be credited against a company’s final tax bill, rather than as a reduction in its taxable profits. This should make it more useful—particularly for loss-making companies if the credit is payable in certain circumstances—and we look forward to getting more information as to how it may work.”
“The Patent Box regime is to apply from 1 April 2013 and provides that profits derived from certain patent interests are subject to an effective 10 per cent rate. The consultation on the draft legislation finished in February and it will be good to hear an update on key points arising from this.”