Below is a summary of measures in the 2012 Budget that impact on the Public Service Mutuals agenda.
Employee ownership – HM Treasury will conduct an internal review of the role of employee ownership in supporting growth and examine options to remove barriers, including tax barriers, to its wider take-up. The review will also consider the findings of the work on employee ownership being led by the Minister for Employment Relations, Consumer and Postal Affairs, due to report in the summer, and will conclude ahead of Autumn Statement 2012.
Government response to Office of Tax Simplification (OTS) employee share schemes review – The Government will consider the recommendations of the OTS’s review of the Government’s tax advantaged share schemes, and consult shortly on how to take these proposals forward.
Social Investment – HM Treasury will conduct an internal review looking into the financial barriers to social enterprise. Many mutuals spinning out of the public sector are set up as social enterprises. These new organisations and social enterprises more widely have a key role to play in supporting the government’s objectives for rebalancing the economy, reforming public services and promoting social justice. As it stand private capital markets fail to adequately supply capital to many of these organisations – this finance gap is only filled in part by the social investment market, which is embryonic and needs support.
The social investment review is an ideal opportunity to remove the legal, regulatory and fiscal barriers to social investment.
Enterprise Management Incentive (EMI) scheme – The Government will Improve and reform the Enterprise Management Incentive scheme which helps SMEs recruit and retain talent, by providing additional support to help start-ups access the scheme and more than doubling the grant limit to £250,000, subject to State Aid approval.
Community Investment Tax Relief (CITR) – From April 2013, the Government will relax the CITR on-lending requirements that currently place conditions on the speed with which Community Development Finance Institutions must on-lend the funding they receive, and introduce new rules to allow investors to carry unused relief forward.
Corporation Tax – From April 2012 the rate of corporation tax will reduce from 26 per cent to 24 per cent. In April 2013 it will reduce to 23 per cent and come down to 22 per cent in April 2014.
Enterprise Investment Scheme - From April 2012, the EIS annual investment limit for individuals will be increased to £1 million. The qualifying company limits will be increased to companies with fewer than 250 employees, and the annual investment limit for qualifying companies will increase to £5 million under both EIS and VCTs, subject to State aid approval.