UK Government plans will stifle innovation, say biotechs
will stifle life science innovation, according to a group of
biotech small and medium enterprises (SMEs).
A cross section of UK biotech SMEs, led by Oxford-based pharmacogenomics start-up g-Nostics have written an open letter calling for more consultation on the proposals and proposing that CGT be maintained at 10 per cent for investments lasting a minimum of two years. The Government want to get rid of taper relief and instead impose a flat 18 per cent tax rate, regardless of the length of investment. The companies are worried that this will dissuade individuals from ploughing their profits back into their industry. These 'serial investors' are often critical for early stage development of start ups, for example university spin-offs, and were essential to the development of Silicon Valley. Often, employees turn down higher wages at larger, established companies in favour of share option schemes at SMEs and the firms believe the Government's changes could put this at risk and prevent them attracting the best employees. "Life Science is the UK's most valuable business sector," said Mark Tucker, CEO of G-Nostics Ltd. "We need to create the right climate for innovation, attract and retain Britain's talent, and motivate the people who are willing to take the risk of investing in small technology companies." As well as SMEs, the collation can also count venture capitalist investors among its members. They are hoping that together, they can force the Government into a U-turn over the issue, which only comes into force in April. Much of the discussion around the changes has focused on larger companies and Private Equity houses. However, Lord Sainsbury, a former science minister, argues that the needs of smaller companies are more likely to make the Government change its mind. "If you focus your argument on the entrepreneur end of things, there might be scope for getting a change back to a lower tax rate for people investing at the early stage of businesses." Readers can have their say with the launch of a 'Life Science - Save CGT Relief' petition and survey. At the time of writing, 142 people have signed the petition.