The Government is committed to helping entrepreneurial businesses raise growth capital by continued support of EIS and VCT.
Dividend and capital gains tax allowances are being reduced, and the threshold of top rate tax drops, so EIS and VCT tax reliefs are more valuable now than ever.
The Autumn Statement was a defining moment for the latest iteration of the Conservative government, with the new Chancellor using the last few weeks to manage expectations and prepare the nation for what he outlined will be a tough, but necessary level of fiscal responsibility. The agenda was clear, restore stability and credibility to the UK economy. Eight weeks ago, a conservative Chancellor announced that tax cuts, including those for the wealthiest, would spur the country on, and act as a catalyst for economic growth. Today a Conservative Chancellor has told the nation that tens of billions of tax rises and spending cuts will be the tramlines for fiscal sustainability. Jeremy Hunt believes a balanced plan for stability is crucial, with the burden of the fiscal deficit being absorbed and spread equally across tax increases and spending cuts. Announcing to the House of Commons that you ‘cannot borrow yourself to growth’ and that ‘sound money is the rock for long term prosperity’ the new Chancellor hopes to inspire confidence in markets and steady borrowing cost.
With a lot to unpick from the budget, one point was made clear, the Chancellor is ‘asking more from those who have more’. Meaning those with the broadest shoulders financially will carry the bulk of the income tax increases. This will be achieved in the form of a material threshold adjustment, with the highest earners paying the top rate of tax beyond £125,140, instead of £150,000. Further tax reforms were implemented across the annual capital gains and dividend tax allowances. The latter will be cut from £2,000 to £1,000 in April next year, and then reduced to £500 from April 2024. The annual exemption amount for capital gains tax will be reduced from £12,300 to £6,000 from April 2023 and drop even further to £3,000 in April 2024.
Throughout the everchanging landscape of UK tax rates, the government endorsed Enterprise Investment Scheme and Venture Capital Trust remains a reliable source of tax relief, whilst simultaneously facilitating the flow of capital towards early-stage high growth, research and development focused UK companies. Offering tax free capital growth, 30% income tax relief on the value of the investment, and in the case of the VCT, tax free dividend income, the EIS and VCT remain credible and dependable tax efficient investment products, helping to offset some of the increased demand on higher rate taxpayers.
Whilst taking the opportunity to remind us of his own experience and credentials as a successful entrepreneur, the Chancellor outlined the government’s plans for growth, largely stimulated by the backing of the UK’s world-leading researchers and innovative firms. Recognizing science and innovation as one of the UK’s greatest strengths, the Autumn statement has delivered one of the largest ever increases in R&D public spending, set to be £20 billion a year by 2024-25. This commitment demonstrates a clear synergy between the governments long term plan for economic growth, and the investment strategy of the Calculus EIS & VCT. With a focus on the intellectual property rich sectors of technology and life science, the Autumn statement further endorses and validates our belief that Calculus investors are gaining access to the companies driving the UKs ability to grow as global R&D powerhouse, and in the Chancellors own words, become the ‘world’s next Silicon Valley’
Written by Matthew Moynes – Sales and Marketing at Calculus