Business Secretary, Kwasi Kwarteng, has today published a ministerial statement and launched an 8 week consultation on a proposed new subsidy control system following the UK’s departure from the EU.
The new system will be designed to empower local authorities and devolved administrations, be a clear departure from the EU State aid regime (which is described as inflexible and bureaucratic), and tailored to better support start-ups, small businesses and new industries.
Whilst there is no explicit mention of the role of tax reliefs, such as EIS and VCT, these have previously been within the EU State aid regime. Changes to the rules in 2011 and 2015 were largely to bring the EIS and VCT rules in line with EU State aid restrictions. For example the permitted maximum age requirement was introduced following the EU’s review of the Venture Capital Tax Reliefs in 2015.
We hope that the new control system will provide an opportunity to address some of the restrictions, particularly those that inhibit investment; VCTs and EIS investment have a long track record of investing in growing companies, and we hope that they will be able to continue to deploy their funds and investment expertise in all regions of the UK as part of the post Covid-19 recovery.
The consultation ends on 31 March 2021. The Business Secretary’s statement can be found here and more details on the consultation is set out here.
