BudgetOct 29 2018

Fiscal Phil's boost for tax-efficient investment

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Fiscal Phil's boost for tax-efficient investment
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Chancellor Philip Hammond's Budget was, broadly-speaking, good for business, and anything that is good for businesses, especially smaller firms and start-ups, is good for tax-efficient investment.

Yes, there were measures with particular relevance to our sector, of which more in a moment.

And the reduction in the deficit and accompanying fiscal stability will bolster confidence generally, which can only be beneficial for the enterprise climate.

All that said, there is little doubt that his proposals were aimed more at the public sector, perhaps unavoidably so, given that his previous Budgets have had a business focus.

In particular, his reforms to tax-efficient investment, taking capital preservation schemes out of the equation need to bed down.

Nothing would have been more damaging to confidence in this sector than another raft of changes.

That said, the chancellor has clearly not lost his keen interest in the importance of business intellectual property and the role he sees it playing in a post-Brexit Britain.

His Budget Red Book declares: "In early 2018, the government reviewed how the tax treatment of acquired intangible assets could be made more competitive and administrable.

"Following a short consultation, the government will seek to introduce targeted relief for the cost of goodwill (the amount paid for a business that exceeds the fair value of its individual assets and liabilities) in the acquisition of businesses with eligible intellectual property from April 2019."

And it continues: "With effect from 7 November 2018, the government will also reform the de-grouping charge rules, which apply when a group sells a company that owns intangibles, so that they more closely align with the equivalent rules elsewhere in the tax code."

Of course, we will need to see more details than are presently available before reaching a considered view of this targeted relief, but it is heartening that Mr Hammond listened to representations on this issue from the venture capital industry and I would certainly give the proposals a cautious welcome.

The temporary increase in the annual investment allowance from £200,000 to £1m for a two-year period sends a powerful pro-business message, which we applaud, as does the new allowance for investments in non-residential structures and buildings.

I particularly welcome the changes to the apprenticeship system.

This is a measure that is both pro-business and pro-employee, in that it strengthens the role of employers in such a way that ought to benefit those employees or would-be employees who, while not being of an academic bent, would benefit enormously from an apprenticeship relevant to their needs.

All that said, the Budget did seem a little muted at times, notwithstanding the new digital services tax, aimed at the tech giants, and the abolition of the Private Finance Initiative for future public works projects.

But there was no doubting the chancellor's commitment to enterprise as the keystone of success, post-Brexit, right down to the £5m to be spent on establish "university enterprise zones".

And businesses large and small, established or new, will surely welcome his commitment to continued fiscal discipline.

Dermot Campbell is chief executive of Kuber Ventures