uk start ups
UK start-ups should be the focus of further tax relief for investors, argues FIG (Reuters)

Help heal the ailing British economy by building on the work done to encourage start-ups, a venture capitalist group's manifesto has urged.

The Find Invest Grow manifesto also encourages the government to extend tax relief further, open up pension funds for start-up investment, put government grants in the hands of investors, and improve the education and skills of those taking the risk to create their own businesses.

"The government can do more to make things a little easier for investors," said Robin McIlvenny, an angel investor in about 30 start-ups and a non-executive director at FIG.

FIG's manifesto also calls for the education system to equip schoolchildren with important skills for entrepreneurs, such as critical and analytical thinking.

The government has already introduced the Enterprise Investment Scheme and the Seed Enterprise Investment Scheme which both offer tax relief to investors in start-ups - a 30 percent rebate on the former, 50 percent on the latter - but FIG's manifesto calls for ministers to go further.

Extending tax relief should incentivise investors to put more money into start-ups, which will help the beleaguered British economy to build Treasury revenues and create more jobs.

About two-thirds of the workforce are employed by small and medium-sized enterprises.

Part of FIG's manifesto calls for the government to make it easier for investors to both inject money in and withdraw it from investments.

In order to benefit from capital gains tax relief if you invest in a start-up, your capital must have been invested for three years. McIlvenny called for this to be shortened, possibly to 18 months.

"At the moment, we'd like to see better liquidity in the market, and better opportunities for liquidity," he said.

This would make investing more attractive and should bring more capital to the market for start-ups to access.

"Tax relief takes away the need for government involvement," said James King, founder of FIG.

"Rather than having to hire staff and teams to work with start-ups, with no experience or who haven't made it successfully in the commercial world, it gives a simple way to say we recognise you are the experts and this is a risky asset class, rather than putting taxpayers' money directly into companies, we'll give you a reward for doing something that's better for the economy."

Putting government grant money destined for start-ups in the hands of market professionals should see it given out more wisely, according to the manifesto.

"You don't want the government picking technologies. You want the market picking technologies," said King.

"You want the experts picking the technologies. That's why I think it is a good idea to put the control of the money in their hands."

Encouraging a start-up culture, similar to that in the US, would breed innovation and upskilling, argued King.

"Building a skilled workforce is important. If you do go and work at a start-up you aren't working in a HR department, because you might be the HR department, the marketing department, the sales department, etcetera," he said.

Despite the call for an intensified focus on start-ups, King said the government should not be encouraging everyone to start a business.

"I think that's a terrible idea. Start-ups are scary, stressful, hard, difficult, and time consuming," he said.

"For the founders more than anyone else it's a really tough life, but we at FIG are able to help them. And the government should support them.

"They should ensure that start-ups have the best platform possible on which to succeed and grow."