V1496 – Enterprise Investment Scheme (Reform) Bill 2019

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Poll: Should this bill be passed into law?
As many as are of the opinion, aye (17)
40.48%
Of the contrary, no (9)
21.43%
Abstain (16)
38.1%
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Saracen's Fez
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What is this thread about?
This is a vote in the Model House of Commons (MHoC). This item has already been debated in the House, and is now being voted on by MPs. If you're not an MP, please do not vote or comment here, even if you are able to do so!

What is the MHoC?
It's a political role-playing game where we pretend to be the House of Commons, and it's been going since 2005. We have formed parties, we have elections twice a year, and we debate bills and motions just like the real-life parliament. If you want to know more about how the MHoC works, your first port of call is the user manual. If you'd like to get involved and possibly join a party, you want the welcome thread.


V1496 – Enterprise Investment Scheme (Reform) Bill 2019, TSR Libertarian Party
Enterprise Investment Scheme (Reform) Bill 2019

An Act to reform the Enterprise Investment Scheme.

BE IT ENACTED by The Queen's most Excellent Majesty, by and with the advice and consent of the Commons in this present Parliament assembled, in accordance with the provisions of the Parliament Acts 1911 and 1949, and by the authority of the same, as follows:—

1.For the purpose of this Act
(1) Enterprise investment scheme (EIS) are tax relief designed to help smaller, higher-risk companies raise finance by offering tax relief on new shares in those companies that qualify.

(2) A company is a knowledge-intensive company if, at the time of the share issue, it meets an operating costs condition and either the innovation condition or the skilled employee condition. Provisions of such conditions will be outlined below.

(3) A holding period is the amount of time the investment is held by an investor or the period between the purchase and sale of a security.

(4) Operating costs are expenses associated with the maintenance and administration of a business on a day-to-day basis. The total operating cost for a company includes the cost of goods sold, operating expenses as well as overhead expenses.

2: Tax Relief
(1) Tax relief shall be increased to 40%.

3: Dividend Exemption
(1) Investors will no longer pay tax on dividends received from knowledge-intensive companies after a fixed holding period.
(2) Fixed holding period shall be 5 years.

4: Knowledge-Intensive Conditions
(1) Operating costs condition;
(i)To have spent at least 15% of operating costs on research and development (R&D) or innovation in one of the three years preceding investment
(ii) To have spent at least 10% of operating costs on research and development (R&D) or innovation in each of the three preceding three years

(2) Innovation condition;
(i) At the time the shares are issued, the issuing (EIS) company has created or is creating (or is preparing to create) intellectual property and it is reasonable to assume that within ten years of the share issue, the exploitation or use of that intellectual property will form the greater part of the issuing (EIS) company’s (or, as the case may be, group’s) business.
(ii) The majority of the intellectual property (in terms of value) must be created by the company and the right to exploit it must vest in the company (whether alone or jointly with others).

(3) Skilled employee condition;
(i) At least 20% of the workforce has a higher education qualification and is engaged directly in R&D carried on by the issuing (EIS) company (or in groups, the issuing/investee company, and any qualifying subsidiary).

5.Short title, Commencement, Extent
(1) This act may be cited as the Enterprise Investment Scheme (Reform) Act 2019
(2) This act comes into force on 1st April 2020
(3) This act extends to the United Kingdom

Notes
To encourage entrepreneurship and start-up companies they require capital. By increasing the tax relief (from 30% to 40%) it would encourage investors to make more investments. Investment in knowledge-intensive companies have been low to combat this we introduce dividend exemption for investors in knowledge-intensive companies.

This benefits the economy by supporting innovation, which in turn increases productivity, creates jobs, and boosts growth. Job creation could result in a profit for the Treasury, in terms of more people paying income tax and spending money, which has obvious benefits for the UK economy.

Since 1994, 27,905 companies have received an investment of over £18bn via the EIS. Take the decade to 2016: the number of businesses created in Britain rose by 62%. In 2017, 382,000 businesses were launched in the UK – down marginally from a high of 414,000 in 2016 (perhaps not helped by Brexit uncertainty). To make Britain fit for business after Brexit we need to invest in SME's.

For more info on EIS go to here (https://www.crowdcube.com/pg/eis-tax...r-investors-44)

Cost

Due to lack of data available it's hard costing it accurately. To maintain it at 30% it costs approx £300m increasing it to 40% shouldn't cost that much
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CatusStarbright
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Abstain since my concern remains.
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ThePootisPower
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Nay, because the costing was hardly even attempted. At least try to do some Big ShaqTM "quick maffs" to see if it's gonna increase by much.

You could've at least said "300m at 30%, divide by 3 then multiply by 4 and it'll be 400m" but you didn't even bother with that.

Cost your policies!
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04MR17
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Saracen's Fez please change my vote from aye to abstain. Dodgy mobile site.
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SoggyCabbages
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(Original post by 04MR17)
Saracen's Fez please change my vote from aye to abstain. Dodgy mobile site.
#KingOfTheAbstains
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SoggyCabbages
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Nay for me, costings are still laughable. "shouldn't cost that much", yes because 10's of millions of Pounds Sterling isn't "that much"?
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04MR17
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(Original post by SoggyCabbages)
#KingOfTheAbstains
#LookAtTheDataBeforeMakingFalseC laims
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Jammy Duel
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(Original post by SoggyCabbages)
Nay for me, costings are still laughable. "shouldn't cost that much", yes because 10's of millions of Pounds Sterling isn't "that much"?
You'll find that convention is that anything less than £100m does not need costing, and in practice much of the house will go far higher than that without even an attempt at costing.
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Andrew97
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(Original post by 04MR17)
#LookAtTheDataBeforeMakingFalseC laims
Do you have the data for most ayes, Nays etc for the most recent voting period? Not accusing you of anything, it’s just something interesting to see.
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SoggyCabbages
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(Original post by Jammy Duel)
You'll find that convention is that anything less than £100m does not need costing, and in practice much of the house will go far higher than that without even an attempt at costing.
Good point that, the Conservatives don't bother costing things that cost billions.
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SoggyCabbages
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(Original post by 04MR17)
#LookAtTheDataBeforeMakingFalseC laims
#WhyDon'tYouStopTellingMeWhatToD oIDon'tHaveToListenToAWetSponge
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CatusStarbright
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Soggy lowering the tone as ever.
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SoggyCabbages
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(Original post by CatusStarbright)
Soggy lowering the tone as ever.
What's the point in posting that?
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Saracen's Fez
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(Original post by 04MR17)
Saracen's Fez please change my vote from aye to abstain. Dodgy mobile site.
One Aye has been changed to an Abstention for seat 36.

One Aye has been removed due to an ineligible vote by Mr T 999.
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Saracen's Fez
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The Ayes to the right: 17
The Noes to the left: 9
Abstentions: 16

The Ayes have it! The Ayes have it! Unlock!

Turnout: 93.33%
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