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Markel Tax

13 Mar 2018

Financing growth in innovative firms: EIS knowledge-intensive fund consultation

The objective of this consultation is to look at the capital gap that knowledge-intensive companies face, and to consider an extension to the venture capital schemes to encourage “patient capital”.

Patient capital is defined in the consultation as “long-term investment in innovative firms led by ambitious entrepreneurs who want to build large-scale businesses”. The need for this type of capital has been recognised in recent changes to the EIS and VCT schemes, but the aim here is to look at a new type of fund based on the EIS framework.

Several alternative approaches are outlined in the consultation. The options that are proposed are as follows:

  1. A “patient” dividend tax exemption which would apply after an initial holding period of about five to seven years.
  2. A write off of capital gains reinvested in a fund, similar to the exemption afforded to SEIS investment.
  3. An extended carry back of income tax or CGT deferral, allowing a carry back greater than the one year carry back allowed for EIS relief.
  4. Up-front tax relief allowing for income tax and CGT deferral relief for investment in the fund on the basis that the capital is invested within a specified time frame. Investments would need to be held for a minimum period of three years.

These proposals are at an early stage, but seek to encourage investment in innovative companies that are not expected to produce a return in the short term.

Tagged Tax for entrepreneurs and corporates Employment taxes and share scheme
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13 Mar 2018

Tackling the Plastic Problem

The Prime Minister launched a 25 year Environment Plan in January 2018 including a pledge to eradicate all avoidable plastic waste by 2042.