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By Beth Collins, 11 November, 2021

2021 Autumn Statement support for early stage companies

On the 27th of October, the UK's Chancellor of the Exchequer Rishi Sunak presented the 2021 Autumn Budget and Spending Review. There was no mention of EIS/SEIS/VCT; however, what was made apparent is the importance of early-stage, small-medium enterprises, as well as the need for venture capital to the overall economy.  The Chancellor pledged new reforms for stimulating investment into early-stage companies. Some of the highlights include:

  •  £4.9 billion pledged to go towards financial commitments and loans, including a £1.6 billion injection into Investment funds, £150 million for investments alongside business angels through the Regional Angels Programme, and funding to provide 33,000 start-up loans over the next three years. This funding is all through the British Business Bank.

  • Six months extension to the Covid-19 Recovery Loan Scheme also through the British Business Bank.

  • Regional support was also pledged, such as a £70 million commitment to expand debt and equity finance for businesses based in Northern Ireland.

  • Continued support and expansion of the R&D tax credit scheme to cover software type expenditure required for research and development purposes.

  • Business rate reforms, including extending the supporting small business and transitional relief schemes and implementing 12 months relief from higher bills for occupiers where eligible improvements to an existing property. Additionally, the freezing of the expected business rate multiplier for 2022/2023.

Efforts are also underway for allowing pension funds to invest in venture capital, which would unlock potentially billions of pounds for investment in early-stage businesses.

 

The £1.4 billion Global Britain Investment Fund was discussed as it is to support some of the UK's leading manufacturing sectors.  Additionally, in July, the UK government launched a £375m scheme – ‘Future Fund: Breakthrough’ which will encourage private investors to co-invest with the government in high-growth, innovative firms. This scheme focuses on R&D-intensive companies.  This funding is recognition from the UK government that R&D intensive companies can accelerate the deployment of breakthrough technologies which transform major industries, develop new medicines, and support the UK transition to a net-zero economy. This is due to the high costs, these companies usually require more capital than others. Future Fund: Breakthrough is delivered by British Patient Capital, a commercial subsidiary of the British Business Bank.

Other notable points impacting businesses from a taxation standpoint include:

  • Increase in corporation tax to 25%;

  • 1.25% increase of dividend tax rates.

It is obvious how this Autumn Statement focuses on supporting innovation and stimulating private investment to help the rebuilding of the UK economy since the Covid pandemic. The changes made are intended to enable enterprises to access the finance they need.  These reforms should give confidence to entrepreneurs and VCs that the UK government has recognised their importance in the economy. After these long 19 months with the Covid pandemic affecting everyone, the future is looking optimistic.

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