The Autumn Budget

In the first autumn budget (an annual replacement of the event traditional held in April), the Chancellor introduced a number of new policies to boost the British economy as it prepares to leave the European Union and encourage an “outward looking free trading nation.” During the event, a number of new measures were introduced to encourage business growth, productivity, and to reward investors and savers for backing new companies.


Savers And Investors


Increase The Personal Allowance And Income Tax Rates


The tax-free personal allowance will increase from £11,500 to £11,850 in April 2018, with the basic rate tax band (20%) increasing from £45,000 to £46,350. The net effect of these changes will be a basic rate taxpayer saving £70 income tax per year, and higher rate taxpayers saving £340.


The top rate of tax, payable at 45%, will continue to apply to income exceeding £150,000.


Individuals may choose to take advantage of these new savings by investing these funds into an IFISA provider, such as Crowd2Fund, and letting them grow tax-free.


Abolition of Stamp Duty


The most significant change to retail investors and savers was the announcement of the abolition of stamp duty. Purchasers of homes up to the value of £500,000 will not have to pay stamp duty on the first £300,000. This will result in 80% of buyers not having to pay any stamp duty at all.


Venture Capital Trust And SEIS/EIS Reforms


EIS, a tax scheme which is particularly popular for companies seeking equity crowdfunding (on platforms such as Crowd2Fund), now allows for companies to raise up to £10 million per year, as opposed to the current £5 million. Individuals will also be able to benefit by investing up to £2 million per annum (up from £1 million) into qualifying companies, whilst continuing to benefit 30% income tax relief.


Additionally, the Government has altered the rules of EIS, SEIS and Venture Capitals Trust (VCTs): companies which qualify for these schemes now have to be classed as being truly innovative and entrepreneurial through a new rule based approach. This is positive news for both investors and companies, with the former being rewarded for allocating funds into genuinely disruptive businesses, and the latter being able to benefit from these generous schemes in order to grow.


Businesses


Research And Development


R&D tax credits, whereby businesses are rewarded with a tax credit from the Government for expenditure related to bringing an innovative product or service to market, has increased from 11% to 12%. This is a useful source of non-equity finance for entrepreneurs, and its uplift signifies the importance of the need to develop truly innovative companies in the UK.


Additionally, SMEs are set to benefit from a fund of £500 million which has been put aside to invest in a range of next-generation technologies including artificial intelligence, 5G and fibre broadband. These measures will help build infrastructure to make it easier for companies and individuals to transact within the digital economy.


Patient Capital


The Government is committed to helping foster start-ups into scale-ups, high growth companies which typically experience double digit growth year on year. The findings of the Patient Capital review will result in £20 billion of investment into scale-up UK businesses through the creation of a new fund in the British Business Bank. This will initially be seeded with £2.5 billion of public money and will be focused on helping companies accessing the funding they need in order to continue to scale. It is likely to be particularly useful to technology companies.


Transforming Cities


In order to generate economic activity outside of London, a new £1.7 billion Transforming Cities Fund has been created to “back the Northern Powerhouse, the Midlands Engine and elected mayors across the UK.”


A proportion of the fund will be shared by six areas with elector mayors and will enable them to deliver local transport priorities. £300 million of the fund is being allocated to HS2 infrastructure.


This activity should be welcomed as it will likely result in the creation of more jobs outside of London and will aid the growth of regional businesses. This is in line with our vision at Crowd2Fund to grow the economy, and help SMEs all over the UK.

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Risk warning

Investments like these involve risks including loss of capital. Please see our risk section before making an investment decision