With the UK General Election now just two days away, it is dominating news cycles. Security, law, and order are understandably top of voters' concerns and each political party's manifesto has been heavily scrutinised through this lens.
When it comes to business policy, the political consensus of recent years has been dislocated. Amidst the headlines around public ownership and Brexit negotiating strategy, it’s worth taking time to reflect on one of the specific priorities put forward by the business community.
The Institute of Directors' view
The Institute of Directors (IoD) was quick off the mark, publishing a series of themed business manifestos in rapid succession. The IoD’s contributions present succinct analysis that conclude with clear, actionable policy recommendations.
Instalments have covered reform to corporate governance, modernisation of business taxation, investment in transport infrastructure, and integration between education and employment providers. All of these make the case for reform in pursuit of improved economic competitiveness; an ambition that recent productivity data for Q1 2017 has thrown into sharp relief.
However, it is the first instalment that covered territory closest to our hearts - supporting scale-up businesses.
Supporting startups with EIS and SEIS
In addition to proposals to address the uncertainty around Brexit, the IoD endorses further promotion of tax incentives designed to stimulate investment. Specifically, they expressed concern that Enterprise Investment Scheme (EIS) and Seed EIS (SEIS) investments are concentrated in London and the South East, and go as far as to suggest that investments elsewhere in the UK could attract a tax relief premium.
This could, for example, involve investors in an EIS-eligible company in Newcastle receiving income tax relief at 40%, rather than the standard 30%. Alternatively, it could mean investors in an SEIS-eligible company in Cumbria receiving 100% capital gains reinvestment tax relief rather than the standard 50%.
Undoubtedly an interesting idea, the ultimate goal of any such incentive is clear: to further increase the awareness of - and encourage investment into - early-stage businesses outside of the traditionally investment-heavy South East. EIS and SEIS, two of the most tax-efficient ways to invest, represent established initiatives through which to achieve this.
Although the EIS and SEIS are complex financial incentives, as an innovative co-investment platform, GrowthFunders offers educational guides alongside investment opportunities, giving investors the information they need to invest with confidence.
Only time will tell whether a premium tax incentive might be applied to investments outside London and the South East, but it is something that would be relatively straightforward to implement and deliver positive outcomes for investors and early-stage businesses alike.