Schedule 14 - Enterprise management incentives: amendments
Finance Bill
11:45 am
Mr Stephen Timms (Financial Secretary, HM Treasury; East Ham, Labour)
It might be helpful to point out that the amendment reminds us of the value of the low inflation that we are currently enjoying. Inflation has been at historically low levels for several years.
There is value in having easily remembered round numbers rather than numbers that are slightly changed each year in line with inflation. There are several examples of measures introduced by the previous Government in which indexation was not provided for. I would not agree that indexation should automatically be applied whenever any measure of this kind is introduced. For example, the minimum amount directly invested by an individual in a company in a tax year that can qualify, under the enterprise investment scheme, for income tax relief is £500. If amendment No. 23 were accepted, if the retail price index were 2 per cent. higher than it was last September, that sum would rise to £510 next year, which would not constitute a significant gain for anybody.
There are some minor drafting errors, on which I shall not dwell. There is confusion about what should be done with the £1,000 de minimis amount that applies where, under the corporate venturing scheme or the enterprise incentive scheme, an investor receives value back from the company in which he or she invests. Amendment No. 23 proposes that the sum should be uprated for enterprise incentive scheme income tax relief but does not include a Treasury order to achieve that. None of the amendments deals with the corresponding de minimis provisions for enterprise incentive scheme deferral relief and the corporate venturing scheme. The amendments deal with asset size tests for the enterprise incentive scheme, the corporate venturing scheme and the enterprise management incentive scheme, but leave untouched the corresponding test for the venture capital trust legislation, which needs to keep in step with those for the enterprise incentive scheme and the corporate venturing scheme. Even if the principle were one that we should accept—which I do not think it is—several loose ends would need to be addressed.
We keep all the figures under review and will continue to do so; if at any time we are persuaded that there is a case for changing them, we will do so. That happened in 1998, for example, when we relaxed the gross assets test used for the enterprise incentive scheme and for venture capital trusts; the upper and lower figures were both raised by £5 million, which preserved a difference of £1 million between the amounts while increasing the lower amount by 50 per cent. That is a good example of an inappropriate indexed rise. For the reasons that I have set out, I ask the Committee not to introduce automatic indexation.