On 29 November 2011, the Chancellor made his Autumn Statement. There were very few entirely new business tax measures.

The key business tax announcements are summarised below:

Capital Allowances and Enterprise Zones

100% capital allowances will apply to expenditure incurred between April 2012 and March 2017 on plant and machinery for use in designated assisted areas within six Enterprise Zones ("EZ"). The EZs concerned are the Black Country, Humber, Liverpool, North Eastern, Sheffield and Tees Valley. There will be a cap of £125 million per project.

The government will continue to discuss with the devolved administrations enhanced capital allowances for businesses located in their EZs.

Seed Enterprise Investment Scheme

The government will introduce a new scheme (Seed Enterprise Investment Scheme ("SEIS")) from April 2012 to encourage investment in start-up companies.

SEIS will provide:

  • Income Tax relief of 50% for individuals who invest in shares in qualifying companies, with an annual investment limit of £100,000.
  • Capital Gains Tax exemption on gains realised on disposals of assets in 2012/13 and invested through SEIS in that year.

There will be a cumulative investment limit of £150,000 for the start-up company, whose total assets, before investment, must be below £200,000.

Other Venture Capital Changes

The Chancellor also confirmed that the government will:

  • simplify the existing EIS rules by relaxing the connected person rules and the definition of shares that qualify for relief;
  • introduce a new restriction to exclude companies set up solely to access EIS relief;
  • exclude the acquisition of shares in another company;
  • remove the restriction that prevents VCTs investing more than £1million in a qualifying company.

VAT and Cost Sharing

The government has announced that it will introduce an exemption for services shared between VAT exempt bodies. This exemption should enable, amongst others, charities and other "not for profit" organisations that make VAT exempt supplies, to collaborate to achieve cost savings and economies of scale.

Draft legislation for all of the above is expected shortly.

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