Share schemes offset CGT rule changes

Share schemes offset CGT rules

The popularity of Enterprise Management Incentives, the share option scheme introduced to help small businesses recruit and retain key staff, has defied the damage done by the government’s abolition of capital gains tax taper relief.

Latest figures from HM Revenue & Customs show that the number of companies granting options through the EMI scheme increased by almost 10 per cent to 2,790 in the last financial year.

Although EMI was wounded by the abolition of taper relief, which was designed to complement the scheme, the figures show an increase in both the number of employees exercising options and the average value of shares over which options were granted.

While the number of employees exercising options has increased by 20 per cent since last year, the income tax and national insurance relief on the exercises has increased by 45 and 67 per cent, suggesting that companies using EMI experienced a significant growth in share value.

Malcolm Hurlston, chairman of the Employee Share Ownership Centre, said: “As business incentives go EMI is the goose that lays golden eggs for struggling start ups.

Popular support programme axed

The Federation of Small Businesses has criticised the government for ending what it claims is a rare example of a good business support scheme.

The employers’ body, which is the UK’s largest by membership count, said that the government should recognise the success of its Local Authority Business Growth Incentive (Labgi) by extending its life span beyond the initial three years.

Local authorities across England have received about £300m a year since 2005 under the Labgi scheme as reward for successfully promoting economic growth in their jurisdictions.

Although the councils can spend the money as they see fit, Labgi encourages them to help start-ups because the cash is directly related to the number of companies paying business rates.

Communities and Local Government, the department handling Labgi, said the scheme was only ever intended to be a three-year deal and that a replacement was being put in place, although this would only hand out £150m over two years.

Roger Culcheth, FSB local government chairman, said: “Given the economic hardships that many [small businesses] are facing at the moment, a less generous scheme to support local business is exactly the wrong thing to do.”

Loans for female entrepreneurs

A £10m loan fund, training and mentoring scheme has been created to help accelerate growth of women-owned businesses.

The support, created by Lloyds TSB Commercial and Enterprising Women, a body representing 3,500 female entrepreneurs in the East of England, offers individual loans of up to £30,000.

The package aims to address problems in female-owned businesses, such as women undercapitalising their companies compared with their male counterparts.

Bev Hurley, chief executive of YTKO, creators of Enterprising Women, said there were “no hidden extras or penalities” to the fund. Owner managers are able to make multiple applications for the loans and are given up to four years to repay the debt.

Sowing seeds for new businesses

Budding entrepreneurs are being encouraged to apply for one of 20 spots on a week-long incubator programme backed by some of Europe’s most successful business founders.

Seedcamp, which is now in its second year, was created to provide a catalyst for Europe’s next generation of entrepreneurs through a mixture of seed capital and a world class network of business mentors.

Applications must be made through the website at www.seedcamp.com before August 10.

Free event on design and IPR

The British Library is holding a free question and answer and networking event aimed at helping entrepreneurs make better use of design and intellectual property law.

Sebastian Conran, a trustee of the Design Museum in London, and Mandy Haberman, inventor of the Anywayup Cup, will provide their insights on the subject before taking questions from the audience.

The event starts at 6pm at the British Library terrace restaurant on July 29, but attendees must book places beforehand. Visit www.bl.uk/bipc/making.html.

Jonathan Moules