Venture Capitalists Respond To UK Budget

by Robin Pilgrim, LawAndTax-News.com, London

24 June 2010

Simon Walker, Chief Executive of the British Private Equity and Venture Capital Association, has responded with both positive and negative comments on the UK Chancellor's emergency Budget.

Simon Walker commented as follows:

"The Budget as a whole is a brave package which will bring an age of fiscal fecklessness to an end. There are many tough measures included which will not be popular but are necessary if the credibility of the public finances in Britain is to be restored. The Chancellor must, however, take care to encourage a spirit of enterprise as well as ensuring budgetary discipline."

"The sharp rise in capital gains tax will discourage investment in this country and leave the UK in an uncompetitive international position. This has to be the cause of deep concern."

"Entrepreneur's relief, as currently constituted, does not cover those involved in the investment chain that brings a new idea to the market and its scope should be reviewed by ministers. It would be of real value if the Chancellor made it clear that no further increases in this tax regime will be introduced in this Parliament."

"Certainty is the essential foundation for innovation. Without this, venture capital will be severely constrained by the creation of the new 28% rate."

According to Ernst & Young, an increase in the rate of capital gains tax from 18% to 28% for non basic rate taxpayers moves the UK from 7th place in a table of its international competitors to 15th or second worst. Only France now has a higher rate of capital gains tax than the UK.

Recommended