Venture capital industry fears £1bn tax hike
Billion pound-a-year hit tax hike fears for VC industry, but Treasury argues that it will only amount to £5m.
The venture capital industry faces a crippling £1bn a year hike in its tax bill, after the Inland Revenue changed the treatment of tax relief.
British Venture Capital Association chief executive John Mackie has written to Gordon Brown demanding a reversal of policy.
In the letter, seen by The Times, Mackie said that the changes would be a ‘deterrent to private equity to continue to increase its investment in the UK’.
Tax relief that VC firms receive through their investment vehicles relating to interest payments has been halted, a decision that was announced on 4 March.
The Treasury said that the new rules would only cost the industry £5m a year.