Budget: Blow to investors and startups ‘hidden’ in small print
A blow to investors and early-stage businesses has been revealed in the small print of Rachel Reeves‘ Budget.
The tax relief available on venture capital trusts has been slashed, according to the full Budget document released by the Treasury following Reeves’s speech in the House of Commons.
While the venture capital trusts’ annual and lifetime limits are to be reviewed, the tax relief is to be cut from 30 per cent to 20 per cent in order to “balance” the change.
Reacting to the news, Emma Wall, chief investment strategist at Hargreaves Lansdown, said investors have until the end of the tax year before the changes come into force.
Devil ‘hidden’ in the detail
Wall said: “The Chancellor has delivered a blow to investors and early-stage businesses alike by slashing the tax relief available on venture capital trusts.
“The Budget speech led with the positive news that both annual and lifetime limits would be reviewed to support scale-up and not just start-up companies.
“This will be warmly welcomed by the industry, which has called for limits to be re-examined to support broader growth opportunities.
“But hidden in the small print of the Budget document was the detail that in order to ‘balance’ this change, the tax relief on venture capital trusts would be cut from 30 per cent to 20 per cent following the 2025/26 financial bill – so investors have until the end of the tax year before the changes come into force.
“We are encouraged by the measures announced in the Budget to support a retail investment culture, including the stamp duty tax break for IPOs, and the British investment hub.
“However, the tax relief on venture capital trusts has provided many investors with the incentive to support early-stage UK businesses, which in turn support the domestic economy – just the sort of growth this government is championing. This tax change seems counter to that agenda.”