Startup-Manifesto

STARTUP MANIFESTO
tax rules). There is a strong case for incentivising companies to invest
in high growth businesses, supplementing investment by angels and
VCs. Greater engagement from corporates should also be welcomed
for the other benefits it would bring beyond the financial, including
opening up networks and sharing information.
Between 2000 and 2010 the UK had tax reliefs for companies
who invested in high growth companies, the Corporate Venturing
Scheme, but it was not renewed in 2010. As the BVCA 24 and RSA 25
have argued, corporate venturing could be an important source of
capital, and so this tax relief should be revisited.
The next government bring back tax reliefs for corporate venturing.
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REMOVE THE CAP ON ENTREPRENEURS’ RELIEF AND
LOWER THE EQUITY THRESHOLD
Entrepreneurs themselves are restricted in how they can benefit
from tax reliefs on investment in early stage companies. Founders,
as well as ‘associates’ (close family members) cannot own more than
30% of a company and still qualify for SEIS relief. For EIS the bar is
higher, as directors and employees are disqualified from claiming the
relief, effectively ruling out founders.
The argument made is that entrepreneurs themselves benefit from
Entrepreneurs’ Relief and should not benefit from SEIS/EIS as well.
Entrepreneurs’ Relief reduces the Capital Gains Tax (CGT) rate for
founders who sell their business to 10%.
We propose two changes to Entrepreneur Relief to better incentivise
serial entrepreneurship and better decision making:
Remove the cap on Entrepreneurs’ Relief
Entrepreneurs’ Relief is capped at a lifetime value of £10 million.
Beyond this threshold a founder would pay the standard rate of
CGT of up to 28%.
Removing the lifetime cap would encourage serial entrepreneurship,
incentivising successful founders to start new businesses and
reinvest some of the money they make.
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