UK: British businesses have called on the Treasury to incentivise private investors to invest in small and medium-sized enterprise [SMEs] by introducing a temporary tax relief scheme.
Bucksworth, a law firm working with startups and high growth organisations, has sent a letter signed by 87 UK businesses to the government calling for amendment to the Future Fund.
Currently, investors providing matched funding under the Future Fund cannot claim a temporary tax relief on their investment.
The letter argues that this will exclude startups and retail, hospitality and leisure businesses from the Future Fund due to the inability to secure matched funding.
This problem is exacerbated by the fact that many of these businesses have not qualified for the Coronavirus Business International Loan Scheme [CBILS] and Bounce Back Loan due to the restrictions on these schemes.
Bucksworth has therefore suggested a temporary tax relief scheme, similar to the Enterprise Investment Scheme [EIS], is introduced and be open to startups with a permanent establishment in the UK.
The scheme should have a higher upfront rate of income tax relief, and no time limits on the age of the business so that more established SMEs can qualify.
Michael Buckworth, managing director of Buckworths, said: “The government has provided billions of pounds of financial support to businesses of all sizes throughout the United Kingdom. We are now asking the government to help SMEs who struggled to access Covid-19 support raise investment by creating a temporary new incentive scheme for “angel” investors.
“The huge success of the EIS scheme in funding UK startups demonstrates that tax incentive schemes work. Replicating the EIS scheme on a temporary basis with lighter restrictions on qualification and use of funds would encourage the private sector [and not the government] to take risk and would secure the future of our SME sector to the broader benefit of the British economy,” he added.