UK Private Capital, an industry group representing the country’s private equity and venture capital firms, has called on the government to introduce a new form of relief to encourage late-stage investments.
The group has urged for the introduction of Scaleup Reinvestment Relief (SRR), which would create a new capital gains tax reinvestment relief that would apply to where gains from successful investments are then reinvested into qualifying the businesses.
The trade body said that relief of this kind would help the UK move beyond being overly focused on early-stage funding and allow investors to feel confident continuously backing business through their growth journeys.
Under the proposal, the relief would apply to UK-headquartered scaleups, UK-focused venture and growth equity funds and R&D-intensive companies that are aligned with the growth areas defined by the government in its Modern Industrial Strategy.
UK Private Capital has pointed to success with similar measures in Sweden and Estonia, both of which have tax policies that encourage repeat investments.
“The UK does not suffer from a shortage of ideas. It suffers from a shortage of scaleup capital,” said UK Private Capital chief executive Michael Moore.
“A Scale-up Reinvestment Relief would send a clear signal that the UK intends to compete for capital, talent and ambition. It would reduce premature exits driven by tax or capital constraints, supporting founders to remain engaged for longer.”
