The New Economic Landscape for Business Growth and Investing in the UK

1. The New Economic Landscape for Business Growth and Investing in the UK David Petrie Head of Corporate Finance, ICAEW 1 July 2011

2. Contents • Introduction • UK Government Plan for Growth • Tax system • UK competitiveness • The Business Growth Fund • Questions

3. Introduction David Petrie, Head of Corporate Finance at ICAEW • Represents over 5,000 corporate financiers, many of whom are actively engaged in raising funds for start-ups and SMEs as well as advising Business Angels on exits • Experienced Corporate Financier with background at PwC • Business Angel - Formerly FD of a start-up in the alternative energy sector – in 2009 raised funds from Regional Development Agency and matched funding from Business Angels • Visiting lecturer at the University of Bath School of Management and AMBA Entrepreneurship Competition judge • Also over ten years experience in industry

4. UK Government Plan for Growth Government Objectives • Create the most competitive tax system in the G20 • Make the UK the best place in Europe to start, finance and grow a business • Encourage investment and exports as a route to a more balanced economy • Create a more educated workforce that is the most flexible in Europe Source: HM Treasury and BIS, The Plan for Growth, March 2011

5. Tax system Creation of the most competitive tax system in the G20 • ICAEW - actively campaigning • Simplification • Abolish 43 historic tax reliefs • Consultation on NIC and Income Tax reform • Improvements to IR 35 • Admin. Improvements for Small Business • Increased transparency of personal tax system • Competitiveness • Reduce CT from 28% to 26% to 23% by 2014 • Controlled Foreign Company (CFC) rules • Reduced taxation from profits from patents to 10% • Opt-in provisions to UK CT for foreign branches of UK companies

6. UK competitiveness To make the UK the best place in Europe to start, finance and grow a business • Deregulation • Drop Time to Train proposals for SMEs and other measures costing £350m • Moratorium on new regulation for new and micro-businesses • Implement Young proposals on Health & Safety • A general review of regulation • Planning reform • Streamlining of process • Release of Government land • Removal of national targets on re-use of brown-field sites • Review of commercial to residential • Fast track process for Major Infrastructure planning system

7. UK competitiveness (Cont.) • Start-up finance and business growth • Reform of EIS and VCT – EIS relief raised to 30% • Qualifying company limits to be increased • Entrepreneurs’ lifetime limit doubled to £10m at 10% • Proposals for further seed investment • Small business rate relief holiday extended by 1 year • Innovation • R&D tax credit rate increases – 200% 2011 to 225% in 2012 • Simplification of the R&D tax credit schemes

8. Business Growth Fund • Overview • £2.5bn fund, led by Stephen Welton • Regional infrastructure • £2m – £10m equity • Target company turnover £10m to £100m • Minority stakes • Economic value • Opinions divided • Where is the Equity Gap? • Incremental investment in UK economy

9. Questions