George Osborne delivers a decent deal for aspirant and established businesses

 
Philip Salter
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THE men and women busy building Britain’s future economic wealth broadly welcomed last week’s Budget. Although lacking a radical strategy for growth, the coalition has gone some way in oiling the wheels of entrepreneurship.

Richard Marsh explains how reforms to the Enterprise Investment Scheme has allowed the creation of the first angel co-investment fund in the UK (article, below).

In response to the Budget, PwC cites a number of other positives:

● The reduction in corporation tax rate to 24 per cent from April 2012 (originally expected 25 per cent) and further reduction to 23 per cent then 22 per cent in subsequent two years.

● The reduction in higher income tax rate from 50 per cent to 45 per cent from April 2013 – the most concrete signal yet that the 50 per cent rate is indeed a “temporary necessity”.

● For those who have spent their working lives building business and are now looking to save for retirement, no further tinkering with pensions reliefs.

● A particular win for those companies who can use the Enterprise Management Incentive (EMI) – an increase in the limit per individual to £250,000 (subject to EU state aid approval) and a proposed extension of Entrepreneurs Relief to shares acquired through EMI.

Debbie Griffiths, partner in Deloitte’s entrepreneurial business practice, notes “the increase in the value of EMI (tax advantaged) options which a company can grant to £250,000 is positive for SMEs seeking to recruit and retain high calibre employees without increasing their employment costs.” However, not all will benefit, as “qualifying companies for EMI cannot have gross assets of more than £30m, so some larger SMEs still cannot qualify.”

Money matters. Piers Linney (article, right) knows this better than many – before founding Outsourcery he was innovative in applying a US derived mixed debt and equity funding model to Europe. He still thinks “there is a massive structural hole in the UK” because funds and investors each specialise in only equity or debt. If blended, he thinks we could see the kind of growth capital associated with the west coast of the US.

philip.salter@cityam.com
Twitter: @Philip_Salter