1. Pre Budget Update Implications for Growth 8 December 2011 Jill Evenden - EBS Chartered Accountants

2. Review of the report Overview – main announcements SEIS Business tax R and D (NB Draft clauses out today!!)

3. Overview Predictions 201220132014 GDP Growth %.7%2.1%2.7% Main contributions Business investment.6%.7%.9%

4. Main Business Announcements New tax reliefs for start up businesses Corporation tax rates down Enhanced capital allowances for six further enterprise zones R and D “above the line” for large companies Loan guarantee scheme – easier access to funds General anti-avoidance Tax relief for gifts on “pre-eminent objects” (give your work of art to the Government!)

5. New Seed Enterprise Investment Scheme To encourage investment to higher risk start ups two announcements: 1) SEIS 2) Simplication of EIS and VCT (relaxation of connected party rules)

6. EIS/SEIS continued EIS - 30% New SEIS 50% EIS Rules:. Not “connected” for two years before shares issued, but note Business Angels (be very careful of rules). Qualifying trade – raft of non qualifying (largely property backed, development etc ). Investment up to £500k 2012, £1m from then on. Keep for three years no capital gains tax. Cash- 80% must be used 12 months from date of issue.

7. SEIS From April 2012:. 50% income tax relief regardless of marginal rate. Limit of £100k per annum for individuals (£125k per company so not much!). Capital gains tax exemption on gains realised in 2012-13 and reinvested through SEIS the same year.

8. Planning opportunity? For start ups look at deferring until after April 2012 Be careful of loans – cant lend before shares issued as rules are have to be “subscribing for cash”

9. EIS – the how? Company and share issue must qualify Individual must qualify Administered by Small Company Enterprise Centre (quite helpful!) Upfront assurance Form EIS 1 – wait until after 4 months of trading

10. Corporation tax. Main rate to be 25% from April 2012 (24% 2013). To encourage growth. Small companies rate 20% Points to note: - Marginal rate dropping (26.25 2012/30%) - Bonus v dividend at higher Corp tax rate

11. R and D Invest an additional £75m in supporting technology within SMES Encourage R and D in larger companies “above the line” Ensuring that SME R and D tax credits not reduced

12. Why encourage R and D? To encourage growth and enable businesses to grow SME relief 200% - increasing to 225% from 1 April 2012. Planning opportunity? May not be worth deferring R and D

13. What is R and D?.When a project seeks to achieve an advance in science or technology. The activities that directly contribute to achieving this advance are R and D. Must not be just for commercial gain

14. R and D how it works Profitable company – relief from corporation tax Loss making company – carry back loss/carry forward or set off paye – limited to paye paid (fixed rate here so can lose out by this method) Going concern

15. R and d what costs can you claim for? Includes: Consumables Salary costs (inc bonuses if paid by time of claim) – note work by main shareholder Utilities Sub contract – 65% of invoice

16. How do you do this? On corporation tax return for the year Carry back Must have spent over £10,000 to qualify for relief (nil from April 2012)

17. R and D other points Relief reduced by any grant income Record keeping – need to be able to substantiate Detailed workings need HMRC now asking more questions!

18. Conclusion Pre Budget Update Business Tax SEIS R and D