TaxCorporate TaxTax changes hurt university projects

Tax changes hurt university projects

A new tax regime for university-funded business schemes, introduced in the Finance Act, has resulted in fewer projects being undertaken.

Link: 2004 Budget speech-at-a-glance

Experts at Oxford and Exeter Universities said high-technology ventures had slumped in the wake of the new rules, which now force academics to pay income tax on the value of shares sold in such schemes, the Financial Times reported.

As one example, Exeter University spun out five schemes last year, but none so far this year.

Previously academics who took a stake in a business set up by their university were charged only capital gains tax, payable after selling shares. Taper relief could have reduced the tax bill to as little as 10%.

In 2001/2002 the amount of wealth generated by universities increased from £212m to £289m.

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