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  1. Wealth
November 29, 2011

Osborne's Autumn Statement: Expert Reaction

By Spear's

We have expert reaction and analysis to George Osborne’s Autumn Statement

We have expert reaction and analysis to George Osborne’s Autumn Statement. Read our liveblog of the Autumn Statement here.

David Scott of Harbottle & Lewis says:

‘We have seen from the content of today’s Autumn Statement that the Chancellor’s back is against the wall. In light of the gloomy economic forecast, few specific changes have been proposed to our tax system and the relatively limited “tinkering” is probably welcome.
‘For private clients and their advisers, the most significant taxation change is the introduction of the new “Seed Enterprise Investment Scheme”. This is intended to promote investment in start-up companies by offering income tax relief at 50% on annual investments up to £100,000 irrespective of the rate of income tax actually paid by the investor. There will be a cumulative investment limit for companies of £150,000 so the Chancellor is actively trying to promote investment on a much smaller scale than is currently offered under the Enterprise Investment Scheme.

‘The investment limits are lower under Seed EIS than for EIS (where the annual investment limit is £1m) but the income tax relief is much more favourable under Seed EIS. We can only hope this has the desired effect of stimulating entrepreneurs at a grass roots level and that this will have a knock-on effect elsewhere in the economy.
‘It is clear that these are very tough times and the Chancellor has decided to stick with Plan A. Whether or not Plan A is the right approach remains to be seen.

Sophie Dworetzsky of Withers says:
‘A particularly interesting part of the Autumn Statement is the fact that there is expected to be a net increase in taxes of £31 billion by 2016-17. The interesting question is of course how this is to be achieved – through stealth tax increases such as freezing the CGT exempt amount for 2012-13, through already announced measures, or perhaps the much debated general anti avoidance rule will, if implemented, assist?
‘In an Autumn Statement hallmarked by caution, it was heartening to see a continued awareness of the importance of attracting investment. Most notably, the new Seed Enterprise Investment Scheme (‘SEIS’) relief was announced, which will come into effect from April 2012, offering a 50% income tax relief on qualifying investments and capital gains tax relief for the following year where gains are reinvested in qualifying businesses. Hopefully this will go some way to mitigating the freeze in the annual CGT exempt amount for 1012-13 for investors in qualifying businesses.
‘At the same time, it seems a broader range of shares may qualify for EIS relief, but schemes designed to exploit the EIS rules and also based on Feed-in-Tariff businesses will no longer meet EIS criteria.
Notably absent from the announcements made today was any mention of the draft legislation on residence and domicile which had been expected on 6 December. Given the positive tone of the consultation paper and the cautious optimism with which practitioners greeted the proposals, including permitting tax neutral investment and providing clear criteria for a statutory residence test, it is to be hoped the draft measures will be available shortly. Indeed, they are even more necessary to stimulate much needed investment.’

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First off the block was entrepreneur Julie Meyer of Ariadne Capital:

‘By introducing the new Seed Enterprise Investment Scheme, offering 50 per cent tax relief on investments of up to £100k for start ups, and a year-long capital gains tax on that investment, the government has made a positive step. They are letting angel investors keep more of their money in order to build the economy. 4.8 million SME’s in the UK and 10,000 fast-growing SME’s are busy building the future.

‘Government should not try to figure out which projects to back, or which teams to back. The ultimate confidence move would be to trust British people to build the right companies, spend with their own money, and invite investors from around the world in to back our projects. By enabling people and businesses to keep more of their own money by small business tax holidays and lower income tax, business owners and citizens would build and spend. When they do, they create growth.

‘If at the same time, large companies that make billions in revenue in the UK, eg Google, started to pay a more appropriate level of tax, then we could fund the tax breaks to citizens and business owners.’

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