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’.