"While the latest growth snapshot provided a bit more cheer to blow away the January blues, the underlying performance is a sluggish one, with the UK economy only expanding by 0.1% on a quarterly basis. Nurturing the business stars of the future is essential for long-term growth, and there are plenty of British start-ups eager for funding to expand. While it's encouraging to see Rachel Reeves leading a delegation of start-ups at the World Economic Forum in Davos to showcase fast-growing UK businesses, she should rethink the decision to limit tax incentives for investors who are willing to take the risk in backing them."
"Experienced investors can provide the vitamin boost the UK economy needs by putting their financial weight behind startups via Venture Capital Trusts (VCTs). As well as helping boost long-term growth they help create armies of angel investors and enable them to save tax in the process. VCTs currently provide income tax relief of up to 30%, and dividends paid out are tax free. But under plans announced in the Budget, the income tax relief available is reducing to 20% in the next tax year."
UK quarterly GDP expanded by only 0.1%, indicating a need for more capital to support fast-growing startups and scale-ups. Venture Capital Trust managers allocate 36.8% of investments to companies growing revenues by more than 25% year-on-year, while only 2.1% of FTSE All Share constituents achieved comparable growth. Rachel Reeves is leading a delegation of start-ups at the World Economic Forum in Davos to showcase high-growth British firms. VCTs offer up to 30% income tax relief and tax-free dividends, but Budget plans will reduce income tax relief to 20% next tax year, risking reduced investment into high-growth businesses.
Read at London Business News | Londonlovesbusiness.com
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