North East Connected

New Tax Relief Rules could hold back Region’s Tech Sector warns Baker Tilly

Screen Shot 2015-08-18 at 12.40.13Accountancy firm Baker Tilly is warning that new rules introduced in this year’s Finance Bill could jeopardise the growth plans for tech businesses in Yorkshire and the North East.

The Enterprise Investment Scheme (EIS) and Seed Enterprise Investment Scheme (SEIS) are government initiatives which offer attractive tax breaks to small businesses in the UK. EIS offers tax breaks to investors purchasing shares in small private companies, whereas SEIS is aimed at those investing in even smaller companies. Both schemes, along with Venture Capital Trusts (VCTs), have raised billions of pounds worth of funding for small businesses, and helped drive investment in many companies – particularly in the technology sector. However, as a result of EC direction, new stricter rules affecting the EIS and VCT schemes were introduced in the recent Summer Budget and Finance Bill, which could harm some businesses’ growth plans.

These new rules impose:

Stephen Green, Baker Tilly Corporate Finance partner said: ‘These new rules will only add to the existing complexity of these important and successful schemes, and my specific concern is that high growth technology businesses in Yorkshire and the North East will inadvertently be hit hard by this new legislation.

‘These new rules could deter acquisitions made to compliment or further develop existing technologies or create wider market applications, and yet ironically it is these very companies that George Osborne is keen to help grow in the UK. My fear is that the Government may inadvertently have switched off the tap to a vital source of funding for many businesses in the region.’

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