PRINT THIS PAGE The UK's Budget19/03/2008. Source: SJ Berwin. Simon Witney 
As it turned out, last week's UK Budget was a pretty uneventful affair, even if the opposition leader's conclusion - that it was 'delivered with all the excitement of a man reading out a telephone directory' - was perhaps a tad harsh. But the UK's private equity industry will have been relieved that there was no more bad news, and welcomed a few positive announcements, writes Simon Witney of SJ Berwin.  After a shaky start to his term of office, Mr Darling's debut budget focused on "stability". Even though he is pressing ahead with changes to the capital gains tax regime, and to the tax treatment of UK resident but non-domiciled individuals (so called "non-doms"), he has signalled that these changes will be the last for a while. He has also withdrawn some of the most draconian changes to the non-dom rules, and confirmed a (limited) "entrepreneurs' relief" from capital gains tax. Neither of these changes is good news for the British private equity industry - the dramatic restriction of the 10% tax rate for capital gains on business assets, and the £30,000 levy on non-doms, will certainly both make the UK less attractive - but announcements over the last few weeks have limited the damage done by over-hasty decisions taken last autumn.
There was a welcome announcement on public procurement. For many years, venture capital investors have looked to the way that the public procurement system works in the United States, and argued that a similar system in the UK could provide real stimulus to enterprise. In a report published by Lord Sainsbury last year, immediately endorsed by the Government, further measures to promote a better procurement system were suggested. Last week Mr Darling announced the appointment of Anne Glover to lead a group looking at how to give firms better access to government contracts, to look into barriers that can be removed, and to look at the practicality of setting a target of 30% for small and medium-sized enterprises to win 30% of all public sector business in the next five years. Alongside that was the announcement of a fund focused on female entrepreneurs, increases in the limits for the Enterprise Investment Scheme and the Enterprise Management Incentive Scheme and more initiatives to improve access to finance for small business.
There were also a number of tax rate changes which, although announced this time last year, will come into effect next month. For business, the most significant will be a reduction in the main rate of corporation tax from 30% to 28% from this April, while the rate applying to small companies will increase from 20% to 21%. There were also a number of explicit tax rises, including "environmental" taxes.
As the CBI, a British business association, put it: "the government took a first step towards repairing its enterprise credentials" last week. There were few surprises in the budget: that in itself is a welcome development.
SJ Berwin is a pan-European law firm with a particular focus on private equity. It has offices in London, Frankfurt, Munich, Berlin, Madrid, Paris and Brussels. If you would like further information on its services to the private equity industry please contact Jonathan Blake or Simon Witney in its London office +44 (0)20 7533 2222 or visit the website at www.sjberwin.com.
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