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Chancellor’s Mini budget and Growth Plan


Chancellor’s Mini budget and Growth Plan: EIS to be extended and important additional boost to the SEIS scheme

Chancellor Kwasi Kwateng has today made his “mini budget”  in which he announced a number of areas to turbo charge growth and investment and recognised the need to unlock “unbounded  entrepreneurial potential” here in the UK  and our strengths in science and innovation.


EIS and VCT to be extended beyond 2025

The Chancellor stated that the government remains supportive of the Enterprise Investment Scheme (EIS) and Venture Capital Trusts (VCT) and sees the value of extending them beyond 2025. Although no further details are as yet available.


SEIS to be boosted

As part of this budget package, we are delighted to note that the Chancellor  has announced his intention to increase the generosity and availability of the Seed Enterprise Investment Scheme (SEIS) from April 2023, the following changes will come into force:

  • The company limit will be increased from £100,000 to £250,000 
  • The gross asset limit will be increased from £200,000 to £350,000
  • The age limit will be increased from 2 to 3 years
  • To support these increases to company limits, the annual investor limit will increase from £100,000 to £200, 000


Company Share Option Plan aligned with EMI

The government also announced plans to increase the benefits of the  Company Share Option Plan, designed to improve the ability of British companies to raise money, attract talent and ultimately grow and succeed.

  • From April 2023, qualifying companies will be able to issue up to £60,000 of CSOP options to employees, double the current £30,000 limit.
  • The ‘worth having’ restriction on share classes within CSOP will be eased, better aligning the scheme rules with the rules in the Enterprise Management Incentive scheme and widening access to CSOP for growth companies.


Further review of Research and Development (R&D) tax reliefs

Several reforms having already  been announced, including bringing pure mathematics research within scope of the reliefs, including data and cloud computing as new qualifying costs and refocussing the reliefs towards innovation in the UK, The Government will continue to review if further changes are needed.

 

Unlocking institutional investment into innovative UK Scale Ups

The government will launch the Long-term Investment for Technology & Science (LIFTS) competition, providing up to £500 million to support new funds designed by institutional investors and world-class fund managers, aiming to crowd billions of pounds of private investment into UK science and technology businesses. Following a short period of industry engagement led by the British Business Bank, the government will launch a call for proposals by the end of the year to identify promising fund structures and vehicles, with the intention that funds go live as soon as possible next year

 

Delivering reform of the pensions regulatory charge cap  to enable investment in UK Venture Funds

The government will bring forward draft regulations to remove performance fees from the occupational defined contribution pension charge cap, ensuring that savers benefit from higher potential investment returns while providing clarity for institutional investors to help unlock investment into of the UK’s most innovative businesses and productive assets.


Scrapping Solvency II

The Chancellor also announced that later this autumn the government will bring forward an ambitious deregulatory package to unleash the potential of the UK financial services sector. This will include the government plan for repealing EU law for financial services and replacing it with rules tailor made for the UK, and scrapping EU rules from Solvency II to free up billions of pounds for investment.


Annual Investment Allowance

The government will support UK businesses by making the temporary £1 million level of the Annual Investment Allowance permanent, instead of letting it fall to £200,000 after 31 March 2023. This will support business investment, provide businesses with more stability, and make tax simpler for any business investing between £200,000 and £1 million in plant and machinery.

 

 You can read the full published document here

By UKBAA 23 Sep 2022