BVCA response to the Budget 2016
16 Mar 2016

Responding to today’s Budget Statement, Tim Hames, Director General of the British Private Equity & Venture Capital Association (BVCA), said:

“The Chancellor's Budget today reflects the economic uncertainties of the times. The UK is certainly experiencing a degree of pause but what is not clear is whether this is a prelude to a further spurt in growth or a serious slowdown. In the circumstances, therefore, this is inevitably something of a holding budget.

As anticipated, Mr Osborne announced the introduction of a restriction on the tax deductibility of interest. We have been fully engaged with both HM Treasury and the OECD throughout their respective consultation processes and recognise that the Government has taken on board some of the concerns we raised. In particular we welcome the £2 million de minimis threshold as we recommended in our submission to HM Treasury in January to protect the smallest businesses from the impact of these changes. Around 90% of our members’ investments in the UK are into small and medium-sized companies, and it is companies like these that are forming the backbone of our economic recovery. We will continue to engage with HM Treasury on the detailed implementation of these rules with a view to encouraging a phased introduction to allow businesses to adjust to such a significant change in tax policy.

Many of the other specific measures the Chancellor has set out are welcome - notably the extension of entrepreneurs’ relief and further reduction in corporation tax - but he needs to ensure that he does nothing to deter real longer-term investment or entrepreneurialism.

In that light, it is a mistake for the Chancellor to exclude carried interest from the otherwise welcome reduction in the capital gains tax rate as this is an entirely illogical position. We believe he should reconsider this stance as the Finance Bill moves to parliamentary consideration."

Notes to editor
  1. The BVCA’s response to HM Treasury’s consultation on the tax deductibility of corporate interest expense can be found here.

  2. The British Private Equity & Venture Capital Association (BVCA) is the industry body for the UK private equity and venture capital industry. The BVCA has over 600 member firms, representing the vast majority of UK-based private equity and venture capital firms and their advisers.

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