The new Chancellor, Rishi Sunak is dealing with an unprecedented number of issues that are threatening the economy. A budget that helps stimulate global trade must therefore be a priority. The following ‘Super Six’ policy changes would help businesses widen their trading horizons and ambitions:
Relaxing EIS (Enterprise Incentive Scheme)
The EIS offers attractive tax relief but it is currently highly complex and technical. Relating the regulations for SMEs looking to establish trading links overseas would help attract investment to these businesses and help their growth ambitions.
‘R&D credits’ overseas
R&D credits also offer generous tax reliefs, to encourage development. It would be good to see a similar system extended to cover expenditure by businesses looking to break into overseas markets.
Clarity over AIA
The problem with AIA (annual investment allowance) is that there is a lack of clarity over qualifying spend and a constantly shifting ‘use-by date’, currently set at 31.12.20. The budget presents an opportunity to extend the ‘use-by date’ for additional allowances by at least five years and provide an incentive to encourage capital investment in assets that would stimulate overseas trade. Businesses need clarity and stability – and AIA needs amended to provide that certainty.
Entrepreneurs’ Relief (ER)
ER currently rewards entrepreneurs with a tax rate of just 10% up to £10m from the sale of a business and is one of the most successful policies for encouraging and rewarding growing businesses. If the relief is withdrawn or amended the government could encourage overseas ventures by allowing entrepreneurs to retain the £10m relief where there is reinvestment of the sale proceeds in businesses expanding overseas.
Better export incentives
Current State Aid rules arguably restrict the creation of grants and incentives tailored to export activities. These rules currently expire on 31.12.20, and it could be an opportune moment at which to launch a new range of grants and incentives that support entrepreneurs in trading overseas. Supporting the recruitment of specialist staff and encouraging investment in new assets that drive export activity would be well-received by businesses wanting to trade overseas.
Finally, tax relief for the goodwill acquired when a UK business makes an overseas acquisition would encourage overseas trade and expansion. A new tax relief for acquisition goodwill could be the key to encourage more businesses to pursue overseas growth strategies.
If you have any questions or queries regarding global trade and the policies noted above, please contact your usual Campbell Dallas advisor or:
0141 886 6644
The information in this blog should not be regarded as financial advice. This is based on our understanding in March 2020. Laws and tax rules may change in the future.