B770 - Support our Startups Bill 2015 Watch

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Birchington
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B770 - Support our Startups Bill 2015, TSR Conservative and Unionist Party


Support our Startups! Bill 2015



A bill to provide legislative measures designed to provide comprehensive help to British SMEs by encouraging finance, attracting international talent and supporting serial entrepreneurship


BE IT ENACTED by the Queen’s most Excellent Majesty, by and with the advice and consent of the Lords Spiritual and Temporal, and Commons, in this present Parliament assembled, and by the authority of the same, as follows:—

  1. Definitions
    1. Small and Medium Enterprises (hereby referred to as SMEs) are defined to be an enterprise with fewer than 250 employees, an annual revenue less than £25.9 million, and a balance sheet not more than £12.9 million.
    2. STEM Subjects are defined to be a subject classed in the fields of Science, Technology, Engineering and Mathematics.
    3. Seed Accelerators are defined to be programs which provide pre-seed stage investment and time limited support (comprising mentoring, events etc.) in exchange for equity (See Notes section for a more detailed definition).
    4. Angel Investors are defined to be an investor who provides financial backing for small startups or entrepreneurs.
    5. Crowdfunding is defined to be the practice of funding a project or venture by raising monetary contributions from a large number of people, typically via the internet.
  2. Visa Reform
    1. The Tier One (Post Study Work) Visa shall be reintroduced for graduates that have studied a STEM subject to a graduate level.
    2. The Tier One (Graduate Entrepreneur) Visa shall be amended as follows:
      1. The Visa Cap of 10 Visas per institution shall be increased from 10 to 50.
      2. When the visa cap is reached, institutions may apply for a discretionary extension, at a duration of one year, subject to the approval of the Home Office.
      3. The type of authorised endorsing bodies shall be reformed to include Seed Accelerators.
    3. The Tier One (Enterpreneur) Visa shall be amended as follows:
      1. The type of approved funding sources shall be reformed to include accredited Angel Investors, as well as Crowdfunding based financing.
  3. Corporate Venture Capital
    1. The Corporate Venturing Scheme shall be revived, with participating firms subject to the conditions as follows:
      1. The investing firm shall not own more than 40 per cent of the issuing company, nor be able to exercise control of the issuing company.
      2. The investing firm shall not exist wholly for the purpose of carrying on non-financial trades, or if it is a member of a non-financial trading group of companies, exist wholly for the purpose of carrying on non-financial trades, investment (or other non-trade businesses), or be the parent company.
      3. The issuing firm must be an unquoted company and must not have made any arrangements to become a quoted company.
      4. The issuing firm must have gross assets of no more than £7 million immediately before, and £8 million immediately after the issue (if the issuing company is the parent company of a group, this test is applied to the group as a whole).
    2. The investment relief for an investing firm shall be set at 20% of the amount subscribed in full risk ordinary shares of the issuing firm.
  4. Entrepreneur's Relief Reform
    1. The lifetime allowance of £10 million per year shall be reformed into an annual allowance of £8 million.
    2. The requirement that the claimant must be a full time employee shall be abolished.
    3. The requirement that the claimant must hold a minimum of 5% of the shareholding of the company shall be abolished.
  5. SEIS & EIS Tax Relief Reform
    1. The limit to which a company can raise funding from SEIS shall be increased from £150,000 to £250,000.
    2. Convertible Debt shall now be eligible for both EIS and SEIS tax relief.
  6. Financing Reform
    1. Financial Institutions regulated by the Prudential Regulation Authority that provide lending to businesses shall now be mandated to suggest alternative Crowdfunding platforms should a loan not be approved.
    2. The domestic division of the national Sovereign Wealth Fund, "British Investments - Britain", shall now be permitted to invest utilising crowdfunding platforms for up to 5% of the fund's overall value.
  7. Short Title, Commencement and Extent
    1. This Act may be referred to as the Startups Act 2015.
    2. This Act will come into effect on the 1st of January 2016.
    3. This Act extends to the entire British Republic.

Notes
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  1. The definition of Seed Accelerators can be expanded upon by the NESTA publication "The Startup Factories".
  2. The Visa Reform section of this bill is inspired by the COADEC publication "Startup Manifesto".
  3. Tier One visas form the category of work visas for individuals deemed "Highly Skilled". More information can be found on UK Permits' webpage.
  4. The current requirements to be eligible for Entrepreneur's Relief can be found here. By removing the requirement to be an employee, incentives are created for business angels to provide equity finance to small businesses. By reforming the allowance into an annual figure, entrepreneurs are encouraged to continue building new startups rather than simply retiring after the sale of a successful business (known as Vicarage Syndrome), thus providing further employment and innovation opportunities.
  5. The revival of the Corporate Venturing Scheme is designed to encourage the return of offshore cash holdings by large corporations in a manner that is mutually beneficial for many stakeholders. The expected rise in corporation tax revenue as issuing companies grow should compensate any tax revenue cost significantly. Furthermore, the reintroduction of the scheme does not include the deferral relief nor the loss relief that its previous implementation contained.




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Wellzi
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Sounds like a pretty solid bill to me
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James Milibanter
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I like it, Aye!
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Jean-Luc Picard
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Nay
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Saracen's Fez
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Probably aye, but it's late, and I'm too tired for economics now.
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PetrosAC
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Aye, solid sensible bill.
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Aph
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Don't like the focus on STEM.

And assuming the entrapanure relief is paid by the government then that is a massive nay.
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Airmed
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I understand the focus slightly on STEM, but I don't like it still.

I need to think about the figures.
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TeeEff
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(Original post by Aph)
Don't like the focus on STEM.

And assuming the entrapanure relief is paid by the government then that is a massive nay.

(Original post by CescaD96)
I understand the focus slightly on STEM, but I don't like it still.

I need to think about the figures.
This is not focused on STEM but it is recognised that we have a significant deficit of STEM graduates (in IT alone we are forecast to have a deficit of 250000 vacancies by 2020) which is holding back the growth of our start-ups. Start-ups have indicated that having a talented workforce is one of the most important factors in their success which the Visa reforms aims to help fill whilst we train more STEM graduates.

This is not "paid for" by the government as it's a tax break on Capital Gains Tax. Reforming the tax relief provides incentives to start a new startup after a successor one is sold rather than simply retiring, as well as encouraging others to finance their growth rather than a traditional bank. This will hopefully create more jobs and make us more internationally competitive. Unless their start-up grows phenomenally quickly it is unlikely that people will utilise the full allowance every year.
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binarythoughts
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(Original post by The Financier)
This is not focused on STEM but it is recognised that we have a significant deficit of STEM graduates (in IT alone we are forecast to have a deficit of 250000 vacancies by 2020) which is holding back the growth of our start-ups. Start-ups have indicated that having a talented workforce is one of the most important factors in their success which the Visa reforms aims to help fill whilst we train more STEM graduates.

This is not "paid for" by the government as it's a tax break on Capital Gains Tax. Reforming the tax relief provides incentives to start a new startup after a successor one is sold rather than simply retiring, as well as encouraging others to finance their growth rather than a traditional bank. This will hopefully create more jobs and make us more internationally competitive. Unless their start-up grows phenomenally quickly it is unlikely that people will utilise the full allowance every year.
If we have a STEM deficit, why isn't more promotion done in schools?
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TeeEff
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(Original post by CescaD96)
If we have a STEM deficit, why isn't more promotion done in schools?
Because the time lag is too significant to rely on increasing STEM education alone. SMEs have a significant role to play in supporting our current economic recovery and whilst I would naturally prefer to fill the vacancies with British graduates it is unlikely we'll fill the gap quick enough. The Visa reforms are intended as a stop gap measure.

I will naturally welcome legislation by the Secretary of State for Education that would help increase the number of students considering STEM degrees.

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Aph
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(Original post by The Financier)
This is not focused on STEM but it is recognised that we have a significant deficit of STEM graduates (in IT alone we are forecast to have a deficit of 250000 vacancies by 2020) which is holding back the growth of our start-ups. Start-ups have indicated that having a talented workforce is one of the most important factors in their success which the Visa reforms aims to help fill whilst we train more STEM graduates.

This is not "paid for" by the government as it's a tax break on Capital Gains Tax. Reforming the tax relief provides incentives to start a new startup after a successor one is sold rather than simply retiring, as well as encouraging others to finance their growth rather than a traditional bank. This will hopefully create more jobs and make us more internationally competitive. Unless their start-up grows phenomenally quickly it is unlikely that people will utilise the full allowance every year.
But this reform is too much

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TeeEff
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(Original post by Aph)
But this reform is too much

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In what way? They're extremely unlikely to make use of the full allowance every year.

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Aph
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(Original post by The Financier)
In what way? They're extremely unlikely to make use of the full allowance every year.

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Its gone from £10,000 for their life time to now being the equivalent of £508,000 for their lifetime assuming they lived from the average life expectancy and used it once a year after the age of 18.

I object to giving people half a million pounds

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TeeEff
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(Original post by Aph)
Its gone from £10,000 for their life time to now being the equivalent of £508,000 for their lifetime assuming they lived from the average life expectancy and used it once a year after the age of 18.

I object to giving people half a million pounds

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It started at a lifetime allowance of 10 million. A startup where the sale of it generates 8 million in CGT for someone is not created every year. It takes a huge amount of time to develop and grow a new business. This is an incorrect way of looking at it.

We are not giving people anything. They earned their money through hard work and are keeping more of what they made.

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Aph
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(Original post by The Financier)
It started at a lifetime allowance of 10 million. A startup where the sale of it generates 8 million in CGT for someone is not created every year. It takes a huge amount of time to develop and grow a new business. This is an incorrect way of looking at it.

We are not giving people anything. They earned their money through hard work and are keeping more of what they made.

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No but I could make a production line of start-ups

also I'm not sure encouraging the sale of businesses to often foreign investors who would strip the companies to parts and make redundant loads of people is the best idea.
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James Milibanter
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(Original post by Aph)
No but I could make a production line of start-ups

also I'm not sure encouraging the sale of businesses to often foreign investors who would strip the companies to parts and make redundant loads of people is the best idea.
Yes you could, and this would be an incentive to do so. You'd be making a load of profit which would then be taken in by tax and passed on to shareholders and you'd do well for yourself and the country.

Instead of thinking of it as giving people £500000, think of it as taking £500000 less away from the people that earned it. The money that isn't taken by the state will then be invested back into the economy inspiring growth. I quite like this bill.
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TeeEff
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(Original post by Aph)
No but I could make a production line of start-ups

also I'm not sure encouraging the sale of businesses to often foreign investors who would strip the companies to parts and make redundant loads of people is the best idea.
You aren't seriously suggesting businesses can be created like on a manufacturing line? You can't really create a hugely successful startup without devoting a lot of time to it. They're not guaranteed to be successful as starting businesses involves the significant undertaking of risk.

Whilst this may be a small side effect I doubt they will be generally be acquired by foreign investors. We need to recognise that shareholders and owners can be partly motivated by the financial gain of being acquired but if the result is this is they'll try to create another rather than simply retiring, there is still an overall net benefit. As James illustrates, the government will still receive other tax revenues like Corporation Tax whilst the startup is operating.

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Aph
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(Original post by The Financier)
You aren't seriously suggesting businesses can be created like on a manufacturing line? You can't really create a hugely successful startup without devoting a lot of time to it. They're not guaranteed to be successful as starting businesses involves the significant undertaking of risk.

Whilst this may be a small side effect I doubt they will be generally be acquired by foreign investors. We need to recognise that shareholders and owners can be partly motivated by the financial gain of being acquired but if the result is this is they'll try to create another rather than simply retiring, there is still an overall net benefit. As James illustrates, the government will still receive other tax revenues like Corporation Tax whilst the startup is operating.

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You could if you were a capital investor and pay other people to handle the day to day.

I think the figure is about 60% of all British businesses are sold to foreign investors. So I'd hardly say small. And is this money only if they set up another?
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