The UK today made some very welcome tax changes to encourage entrepreneurship, investment in entrepreneurs, and the business environment in general. Some of these changes which could have a big impact in the years to come include:

• If you are a business owner in the UK and sell your business, you will pay only 10% tax on the capital gain up to £10mill, not the full CGT rate of 28%, this is known as Entrepreneurs Relief – a carrot to encourage UK entrepreneurs to pursue that big idea!

• If you are a business angel and invest in a company, the Enterprise Investment Scheme allows for:

1. 30% of your investment to be claimed against your income tax bill (previously 20%), effectively discounting the price of equity investments for business angels – a further carrot to encourage more angel investments into early stage companies!
2. Up to a £1mill (previously £500k) of an angel investment to qualify for the above income tax relief – a carrot for the wealthier business angels to be even more aggressive with their investments and pursue bigger deals!
3. The capital gain from selling an angel investment for a profit to be exempt from tax altogether (unchanged).

• A reduction in corporation tax from 28% to 23% over the next 4 years – a carrot to retain existing companies in the UK, encourage re-investment and attract new companies.

These moves are certainly encouraging signs that the UK is indeed ‘open for business’ and we hope they prove to be further boost to start-up and early stage companies. Note: The descriptions of the tax measures above are simplified, for further details refer to www.hmrc.gov.uk.