Chancellor's Budget Statement answers BIA's calls on both SME access to R&D tax credits and operation of tax-advantaged venture capital schemes
18th March 2015
The UK BioIndustry Association (BIA) welcomes statements made in today's Budget, supporting previous BIA calls for change in respect of SME access to R&D tax credits as well as the operation of tax-advantaged venture capital schemes.
Following the BIA's submission to a recent HM Revenue and Customs (HMRC) consultation calling for an extended advance assurance scheme for SMEs, the Chancellor has today announced that government will introduce voluntary advance assurances lasting 3 years for smaller businesses making a first claim from autumn 2015 and reduce the time taken to process a claim from 2016. There will also be new standalone guidance aimed specifically at smaller companies.
The government also announced, in respect of the Seed Enterprise Investment Scheme (SEIS), Enterprise Investment Scheme (EIS), and Venture Capital Trusts (VCTs), that it will:
- require that companies must be less than 12 years old when receiving their first EIS or VCT investment, except where the investment will lead to a substantial change in the company's activity;
- introduce a cap on total investment received under the tax-advantaged venture capital schemes of £15 million, increasing to £20 million for knowledge-intensive companies;
- increase the employee limit for knowledge-intensive companies to 499 employees, from the current limit of 249 employees;
- smooth the interactions between the schemes by removing the requirement that 70% of the funds raised under SEIS must have been spent before EIS or VCT funding can be raised.
Commenting on the announcements, Steve Bates, CEO of the BIA said:
"The BIA has made a continued case for ensuring that tax-advantaged schemes incentivise investment in high risk, innovative sectors such as biotech, where the wider benefits for patients and the economy are vast. In its input to the Treasury consultation on this issue last Autumn, we argued against a lesser limit of 7 years for a company to be eligible as well as increased limits for 'knowledge-intensive companies'. It is great to see from this Budget statement that Treasury has listened to the BIA and its members."
"The BIA has also long advocated for advance assurance, was closely involved in previous piloting of the service and recently called for an extended scheme in the recent HMRC consultation. These new commitments are very welcome and make it as easier for SMEs to understand what R&D benefit applies to their business and how to navigate that process quickly so that they can back to the business of innovating the products and therapies of the future."
Another announcement of relevance from today's Budget is the proposal to review the availability of capital gains tax (CGT) entrepreneurs' relief on disposals by academics of shares in such companies. The BIA believes that policy should look to support the ecosystem of innovation, research, translation and growth and looks forward to engaging further on this proposal.
Notes to Editors
- The BIA's response to the HMRC consultation on SME access to R&D tax credits can be found at: http://bia.me/1GyPfsm
- The BIA's response to HMT Treasury Consultation on tax-advantaged venture capital schemes, submitted on 18 September 2014 can be found at: http://bia.me/1uLh3W7
- The Budget statement and supporting documentation can be found at: https://www.gov.uk/government/publications/budget-2015-documents
Founded 26 years ago at the infancy of biotechnology, the BioIndustry Association (BIA) is the trade association for innovative enterprises involved in UK bioscience. Members include emerging and more established bioscience companies; pharmaceutical companies; academic, research and philanthropic organisations; and service providers to the bioscience sector. The BIA represents the interests of its members to a broad section of stakeholders, from government and regulators to patient groups and the media. Our goal is to secure the UK's position as a global hub and as the best location for innovative research and commercialisation, enabling our world-leading research base to deliver healthcare solutions that can truly make a difference to people's lives.
Director of Public Affairs and Communications, BioIndustry Association
Email: [email protected]
Phone: 020 7630 2188