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Overview: Business Investment Relief

The use of the government’s Business Investment Relief scheme encouraged non-doms to invest £979m in British businesses last year alone. This is a rise of 8% on the previous year and an almost fivefold increase on 2012/13, the year it was introduced (see graph below).

HMRC Business Investment Relief scheme

The relief has channeled a total of almost £3.5 billion into UK businesses since it was introduced. But recently the Government have made some very positive changes to the relief, so there’s a good chance that investment by non-doms into growth businesses will soon pass the £1bn per year barrier!

If you are selling a business it is vital not to miss out on inbound buyers who may be able to claim Business Investment Relief. And this is why an effective global search for company buyers is so vital.

Here at TheNonExec, we pay great attention to researching potential buyers from the UK and overseas (which is step 3 of our 8-step process). Using the insights on the business and markets gained in previous steps as a base, we build a comprehensive market brief for our analysts. This guide is developed specifically to locate strategic buyers for each company when we act as a business broker for a company sale.

As well as our own CRM data comprising over 14K companies, PE firms and family offices globally, we use a variety of proprietary M&A databases, search engines, industry trade & credit directories to identify companies that meet the specific search criteria. Internationally, our research teams search using both English and the local language to ensure that each search is forensic in nature. This process typically takes 4 – 6 weeks and will create long-lists of several hundred or more potential candidates.

This list is further refined prior to outreach, in particular to ensure that prospective companies are financially able to finance a proposed transaction.

Private wealth law firm Boodle Hatfield says that Business Investment Relief has become a vitally-important conduit for inward investment. Kyra Motley, Partner at Boodle Hatfield, feels that the recent changes to the relief are likely to make it even more popular among non-doms. She says in her recent report that “The almost £1bn that was invested through Business Investment Relief last year would probably never even have entered the UK without it.”

Business Investment Relief allows non-doms to bring money into the UK tax-free, so long as it is used to purchase shares in or make a loan to a British business. Non-doms would otherwise have to pay tax rates of up to 45% on this money if they remit it to the UK.

The changes made to Business Investment Relief last year mean that individuals can now invest in a business up to five years before it begins trading. The previous limit was two years. This has made it more attractive to invest in technology companies that are in the development stage, and may still be several years away from generating revenue.

If you are considering a company sale book an exploratory confidential session with Managing Director, Justin Levine or come along to one of our forthcoming events, [email protected] for more details and to book.

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