Biotechs and pharma praise pro-business budget
UK biotech and pharma trade bodies have praised pro-business measures in chancellor George Osborne’s budget, including reductions in corporation tax and capital gains tax rates, and protection of the patent box tax incentive scheme.
In his budget, announced yesterday, Osborne said that corporation tax will be reduced to 17% in 2020, further to previous announcements that reduced the rate to 19% in 2017 and 18% in 2020.
The higher rate of capital gains tax for most assets will be cut from 28% to 20% and the basic rate will be cut from 18% to 10%, Osborne said, although there will be an 8% surcharge for gains on residential property and carried interest for fund managers. This is to steer investment towards companies instead of buy-to-let property.
Entrepreneurs’ relief will be extended to longer term external investors in unlisted companies. From 17 March, this will provide a 10% tax rate for external investors holding shares in unlisted companies for at least three years.
Osborne intends this as a further incentive for longer term investment into unlisted companies, helping them access finance.
BioIndustry Association (BIA) chief executive, Steve Bates, welcomed the changes, stating that they responded to calls for support for “high risk entrepreneurial companies that are the lifeblood of the UK’s life sciences sector”.
Bates said he was disappointed not to see more information on innovation policy in Osborne’s announcements, although he added that the BIA will work with the government on a forthcoming National Innovation Plan.
Documents outlining budget plans also show that the existing patent box scheme, which gives tax breaks on sales of technology developed in the UK, will be modified to comply with Organisation for Economic Co-operation and Development (OECD) rules.
The UK pharma industry has supported the scheme, which is seen as a way of encouraging investment in the country's life sciences industry.
The Association of the British Pharmaceutical Industry said: "We welcome and support the government in protecting the patent box and we're awaiting clarity from the chancellor on the details of the new scheme as a result of the recent OECD changes."