Chancellor’s Spring Statement: As it affects TechCo’s

15th March 2018

 

As we all get used to the Chancellor’s main Budget now being in the Autumn, he still chose to make a few policy announcements in his Spring Statement yesterday. Items of interest to those running technology companies included:

  • Stagnant growth. Despite the ‘Light at the end of the tunnel’ strapline for his speech, the Chancellor’s amended UK growth forecasts are not very encouraging (2018 – 1.5%, 2019 – 1.3%, 2020 – 1.3%, 2021 – 1.4%, 2022 – 1.5%). Although at least the current account budget deficit that has been with us for 17 years is expected to be eliminated and start being reversed during the next fiscal year.
  • Some previous new tech related spending commitments move a step closer to filtering through to the real world (£190m funding for full fibre high speed broadband, £25m fund for 5G testbeds and £50m to help employers roll out new T level work placements).
  • At present, tech companies that have a business plan wrapped around an eventual trade sale or IPO exit, are usually keen for these eventual proceeds to only be taxable at the Entrepreneurs Relief (ER) 10% rate of CGT. If funding rounds dilute an individual’s shareholding below 5%, entitlement to this low tax rate will currently be lost. So Mr Hammond has made further suggestions of rule changes, to introduce a new tax election, to allow shareholders to effectively ‘bank’ this ER tax rate, when entitled, before it is lost.
  • A new consultation on proposed changes to EIS rules was announced:
    • Investors would not pay tax on dividends received from knowledge-intensive investee companies after a fixed holding period (say 5 or 7 years).
    • EIS deferral relief currently allows investors to defer CGT on gains to the extent that the disposal proceeds are reinvested in EIS qualifying companies. An alternative approach could be taken under which investors are allowed to write off a proportion of a capital gain on reinvestment into a knowledge-intensive fund.

So reference to ‘crumbs’ might have been a more apt strapline than ‘lights and tunnels’.



 
Other items in Blogs
 
Victor Courdelle
15th October 2018 If HMRC Can’t Say, Who Can? – Records Required for ‘Cash Accounting for VAT’ Under MTD

Reference to VAT Notices 700/21, 700/22 and 731 suggests that a business using Cash Accounting for VAT under Making Tax Digital will be required to:- Maintain digital accounting records at transaction level: Keep a digital VAT account using Accrual accounting; Cross reference Monies Received and Paid against individual Sales and Purchase invoices within their digital…

Read More »

Thomas Carter
12th October 2018 How to choose a business structure

Are you thinking about setting up a business?  If so, one of the first decisions you will need to make is that of business structure. The main business structures are: sole trader, partnership, limited liability company, and limited liability partnership (LLP). Sole trader – This is the easiest set up, with very little in the way of red…

Read More »

Richard Alecock
11th October 2018 Why a start up business should complete a business plan

A business plan is a written document that describes your business. By committing your thoughts to paper, you can understand your business better and also map specific courses of action that need to be taken to improve your business. It covers objectives, strategies, sales, marketing and financial forecasts. A business plan can help you to:…

Read More »

Richard Alecock
11th October 2018 Making Tax Digital, VAT and newly registered businesses

All VAT registered businesses with a turnover over the current VAT registration threshold of £85,000 will be required to comply with the Making Tax Digital (MTD) record keeping and reporting requirements for VAT periods which start on and after 1st April 2019. Where a business is VAT registered but has turnover under £85,000 at April…

Read More »

Matilda Mawson
5th October 2018 Have you elected not to claim child benefit?

You may wish to consider the implication this could have on your state pension in later life. Following the introduction of the high income child benefit charge in January 2013 many new parents have decided not to make a claim for child benefit as their individual income is well above the threshold to be fully…

Read More »

Victor Courdelle
4th October 2018 Working With Award Winning Software

We are delighted to announce that two of our chosen software providers have just won national recognition in the 2018 Accounting Excellence Software Awards held in London on 20 September: Xero Accounts – Winner – Accountancy Excellence Awards 2018: Small Business Accounting Software of the Year, Practitioners’ Choice. Receipts Bank – Winner – Accounting Excellence…

Read More »