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
 
Peter Brown
13th January 2019 5 things you need to know about Making Tax Digital

  Making Tax Digital (MTD) is the hot topic this year. It’s one of the most fundamental changes to the UK tax system since the introduction of self-assessment. From April 2019, VAT registered businesses with a turnover of over £85,000 will be required to keep records using software approved by HMRC.  We have condensed the…

Read More »

Stephen Malkin
11th January 2019 Financing your self-build project

  Borrowing to build Self-builders require more money up front than conventional homebuyers. This is because they have to buy their building plots and fund their planning applications before they can apply for any loans. Self-build mortgages tend to be interest-only as fixed-rate loans have substantial exit fees for those who change loans when the…

Read More »

Stuart Kierman
9th January 2019 Running A Business From Home

  If you are looking to start up a business, it is likely to be home based, at least in the early days.  Figures suggest that over 60% of businesses start in this way and that there are 2.9m businesses in the UK operating from home. This blog looks at some of the common questions…

Read More »

Richard Alecock
21st December 2018 Making Tax Digital …… Only 100 days to go!

It’s time to decide how you will digitalise your records in order to meet HMRC requirements ahead of April 2019 HMRC wants the UK to be one of the most digitally advanced tax administrations in the world, improving efficiency, effectiveness and ease of compliance. Their plans signal the end of paper accounting for millions across…

Read More »

Ian Piper
19th December 2018 A Taxing Christmas?

Business owners, like the rest of us, will be all too aware that Christmas is a ‘challenging’ time. A short working month usually means less production, less sales and less payments from customers. Add to this cost of staff Christmas bonuses, various festive jollies and large tax bills just around the corner in January, and…

Read More »

Adrian Mackenzie
18th December 2018 Financial Services Apprenticeship Scheme

We are pleased to announce that our wealth management department are looking to introduce a Financial Services Apprenticeship scheme.   The aim of this scheme is to identify local talented individuals and help them to develop into the next generation of financial advisers/ planners and be part of our successful wealth management team.   Once…

Read More »