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BVCA Responds To Pre-Budget Report

by Jason Gorringe,, London

27 November 2008

The British Venture Capital Association on Tuesday delivered a mixed response to the proposals unveiled by UK Chancellor of the Exchequer, Alistair Darling in his pre-budget report.

It announced that:

“The BVCA welcomes the government’s acceptance of recommendations to allow more small and medium sized businesses to compete for public contracts. A number of other modest measures, including the ability to carry back losses for three years, may help small firms including venture capital backed companies – and we believe the detail of the budget may end up enhancing the Enterprise Investment Scheme."

"We welcome the government’s commitment to future discussions on these matters, and also its plans for a panel to monitor the lending practices of banks."

The Association went on to add:

"We are pleased to hear of the government’s foreign dividend measures and glad that they were not accompanied by wholesale curbs on interest deductibility. With the financial services sector in virtual meltdown, international competitiveness is more important than ever."

But warned that:

"The proposed increases in national insurance from 2011 – and a top tax rate of 46.5% - make the combined tax take on higher incomes of 60% of salary. This will inevitably provide a disincentive for international investors to base their businesses in Britain. The UK’s increased tax complexity and waning competitiveness will rebound to the benefit of the UK’s rivals, like Switzerland, Ireland and, increasingly, the Middle East.”

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