British fintechs call on the Government to incentivise private investors to protect SMEs from collapse

British fintechs call on the Government to incentivise private investors to protect SMEs from collapse
10.06.2020 01:32 pm

British fintechs call on the Government to incentivise private investors to protect SMEs from collapse

Covid-19

Buckworths, the UK’s only law firm working exclusively with start-ups and high growth businesses, has yesterday sent a letter to the Treasury requesting the introduction of measures to incentivise angel investors to invest in SMEs that have been adversely impacted by the COVID-19 pandemic.

The letter, which is signed by a further 87 UK businesses spanning a range of sectors including fintech, hospitality, and retail, calls on the UK government to incentivise private “angel” investors to invest in SMEs to help them repay COVID-19 debt and relaunch their businesses.

Buckworths and the 87 other signatories noted that investors providing matched funding under the Future Fund cannot claim EIS on their investment. They argue that this risks excluding earlier stage start-ups and retail, hospitality and leisure businesses from the Future Fund because they will be unable to secure matched funding from “angel” investors. This problem is exacerbated by the fact that many of these businesses have not qualified for CBILS and Bounce Back Loans due to the State Aid restrictions included in these schemes.

To rectify this issue, the letter calls for the Treasury to introduce a temporary tax relief scheme for “angel” investors that is similar in nature to the Enterprise Investment Scheme (EIS) and open to start-ups with a permanent establishment in the UK. This scheme should have a higher upfront rate of income tax relief and Buckworths believe that there should be no time limits on the age of the business so that more established SMEs in the retail, leisure and hospitality businesses can qualify. Introducing this scheme would not only help save a vast swathe of the start-up ecosystem from insolvency but would also see private investors take on the risk of supporting the SME sector thereby preventing the UK government from incurring further debt.

Michael Buckworth, Managing Director of Buckworths said: “The Government has provided billions of pounds of financial support to businesses of all sizes throughout the United Kingdom. We are now asking the Government to help SMEs who struggled to access COVID-19 support raise investment by creating a temporary new incentive scheme for “angel” investors. The huge success of the EIS scheme in funding UK start-ups demonstrates that tax incentive schemes work. Replicating the EIS scheme on a temporary basis with lighter restrictions on qualification and use of funds would encourage the private sector (and not the Government) to take risk and would secure the future of our SME sector to the broader benefit of the British economy.”

Related News

PPRO announces 85% volume growth despite pandemic, accelerates plans with new investment from Sprints and Citi

PPRO, the world’s leading local payments platform-as-a-service, reports today an 85% increase in transaction volume from last year, highlighting the... Read more »

New lenders accredited to British Business Bank Coronavirus Large Business Interruption Loan Scheme

Today the British Business Bank has announced that it has approved Allied Irish Bank (GB)/AIB (NI) [1], Investec Bank plc and Mercedes-Benz Financial Services... Read more »

Prioritising technology & engagement will lead to quickest economic recovery, says IRIS Software Group

In positive signs for the economy’s recovery, research from IRIS Software Group (IRIS), one of the UK’s largest software companies, has found businesses that... Read more »

New report identifies the factors which will determine SMEs’ chances of a successful COVID recovery

Business bank, Allica Bank has combined data and insight from over 1,000 UK SMEs with a... Read more »

Yolt enters beta for substantial app update in reaction to changing consumer priorities

Yolt, the award-winning smart money app, has today announced that it is heading into a beta... Read more »

Forex trading increased by 300% during COVID-19

With 50% month-to-month growth in trading volumes, FX is on a roll - but what will happen when we’re back to normal?

The coronavirus pandemic threw the world... Read more »

Magazine
ALL
Free Newsletter Sign-up
+44 (0) 208 819 32 53 +44 (0) 173 261 71 47
Download Our Mobile App
Financial It Youtube channel