Tax cuts for small businesses and a more sympathetic regime for buying shares in start-up companies will be included in Chancellor Gordon Brown’s November budget, believes a leading electronics entrepreneur.
Hermann Hauser, a leading figure in developing Silicon Fen the network of small high-tech companies around Cambridge said Brown has taken on board many ideas to help innovation and start-ups grow.
‘We’re finally on the political agenda,’ Hauser told The Engineer.
A recent US study shows that 80% of new jobs are created by small firms. ‘The link between job creation and small companies has not gone unnoticed by the Government,’ Hauser said.
Hauser was present at a recent meeting at the Department of Trade and Industry at which the Chancellor heard ideas on how to turn British innovation into home-grown businesses.
Brown was told how a halving of capital gains tax in the US had opened the floodgates for venture capital, which in turn sprouted many more new businesses.
Hauser believes November’s Budget will include a similar cut in UK capital gains tax from the 40% level. He also hopes a change in tax law will create a more sympathetic climate for buying equity in start-ups. ‘Cheap share options are a vital means of attracting much needed high-quality managers to small high-tech companies,’ he said.
Under the present system, investors are taxed on the assumed market value of the company, said Hauser. With a high-tech firm, this can be hard to assess. ‘We’re asking that small companies be left alone while incubating. You shouldn’t kill them before they’ve hatched.’
Hauser interview, page 16