UK seeks feedback on proposed tax breaks

The UK government is seeking input on its plan to stimulate economic growth by offering small business investors a range of income and capital gains tax relief.

This week the UK government opened a consultation period over its proposals to provide investors in small businesses and start-ups a number of tax incentives.

The measures were unveiled in the UK budget last March as part of the overall 'Plan for Growth' designed to encourage economic activity. Two government schemes which provide tax breaks for investors in small UK companies, the Enterprise Investment Schemes (EIS) and Venture Capital Trusts (VCT), will undergo significant changes as part of the proposal. 

As part of the consultation, the government is gathering evidence and viewpoints on how to best reform its venture promotion programmes. Consultation questions include how to simplify the tax system for investors, define seed-stage activity and business angels and prevent investors from using the schemes as a tax haven.

Ian Sayers, director general of the Association of Investment Companies, said some of the plan’s proposals “raise some complex questions” and that the trade body “will be carefully considering their implications before making a full response”.

The British Private Equity and Venture Capital Association is expected to issue a statement on the consultation launch this Thursday, according to the trade body’s spokesperson. He added the BVCA intends to submit a full consultation response in due time.

The consultation will run for 12 weeks, ending 28 September. Post-consultation the government will produce a response document. Legislation is expected to be introduced in next year’s Finance Bill.