UK - BVCA calls for more favourable treatment of private equity

The association has been keen to stress the need for stability in the UK's tax and regulatory environment in the current climate, arguing that this should be the main priority of the report. But it has also highlighted areas where private equity and venture capital is singled out for unfavourable treatment within current regulations. Indeed in the recent EVCA Benchmarking study of tax and legal environment's across Europe, the UK dropped out of the top three most favourable nations for private equity investing for the first time.

One of the primary concerns surrounds the current law that excludes employees in companies owned by private equity or venture capital firms from participating in approved all employee share schemes. This, the BVCA argues, is counter productive given that an estimated 1 million people are employed by private equity or venture capital portfolio companies, and that the UK's saving ratio is currently at a historic low.

In terms of tax treatment, the organisation has reiterated calls for improved treatment of venture capital, which it emphasises as a catalyst for business growth and job creation and therefore a potentially important part of the UK's economic recovery. Specifically, calls were made for venture-backed SME's to be granted small company reliefs from which they are currently excluded, most notably the Enterprise Management Incentives and Enterprise Investment Scheme limits, as well as to be made eligible for the R&D Tax Credit and the Small Companies Tax Rate.

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