ENGLAND & WALES Trends and Developments Contributed by: James Ross, Claire Matthews, Karen Bail and Marianna Vlas, Winston Taylor
tax, stamp duty, which applies to paper-based trans - fers of unlisted shares). Budgetary concerns doubtless precluded such a radical step, but advisers can take some consolation from the forthcoming introduction of an online system for filing and paying stamp duty, dragging stamp duty into the 21st century and finally eliminating a notoriously bureaucratic procedure that added material delay and costs to M&A activity. Encouraging Entrepreneurship – The Wider Backdrop The recent consultation on encouraging entrepre - neurship also shows signs that the government is thinking about how to support larger companies that have grown beyond the VCT, EIS and EMI limits – par - ticularly by encouraging successful entrepreneurs to reinvest in start-ups, as happens very commonly in the USA.
However, this consultation is taking place in an envi - ronment where capital gains taxes have been increas - ing, not falling. The main CGT rate is now 24%. Business asset disposal relief previously provided a 10% rate of tax for individuals disposing of business assets or certain shareholdings in the company that employed them – including, in particular, individuals who held shares as a result of exercising EMI options. That rate has now increased to 18%. Similarly, indi - viduals subscribing for ordinary shares in unquoted companies can potentially claim “investors’ relief” on a subsequent disposal, but the rate of tax in such circumstances has also been increased from 10% to 18%. The government has indicated that it had heard views that both these reliefs were ill-targeted. While this may be the case, the increase in rates has undoubtedly left an impression that the government is hostile to entrepreneurship – and rebutting this will be one of the challenges it will face when responding to the recent consultation and developing policy in this area.
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