Little progress as start-ups meet City minister over new investing rule changes
Start-up groups met the City minister this week in a bid to soften the controversial new investing rule changes, and hold chancellor Jeremy Hunt’s “feet to the fire”.
They issued an update after a meeting with the City minister Bim Afolami yesterday failed to see a successful resolution to the issue.
The meeting took place following an open letter that was signed by over 2,700 so-called ‘angel investors’ last month, urging the Chancellor to back down on plans to change the definition of ‘high net worth individuals’.
Start-up groups said this could potentially shut off millions of pounds of funding for smaller private companies.
But a reverse in changes to the rules – which took effect yesterday – is no longer an option, Dom Hallas, executive director of the lobby group Start-Up Coalition, said in an to the letter, today.
Despite the lack of progress, Hallas said he is however confident the government “get it” and they plan to work closely with the City minister Afolami and the Chancellor’s team in the “coming days and likely weeks” to discuss how to move forward.
“The issue now is that we still need to fix it,” Hallas wrote.
“We still need to hold their feet to the fire on this issue moving forward, and we intend to,” he continued.
Following the meeting, a statement from the Treasury said: “The Economic Secretary met with representatives from the tech, angel investing, and arts sectors yesterday.
“Bim Afolami listened carefully to concerns they have about the impact of recent changes to the financial promotion exemptions.
“The government fully recognises the crucial role that they play in supporting UK growth, investment, and jobs, and our world class arts sector.
“He undertook to work closely with those sectors affected to address the concerns raised.”
Under the tweaks in motion as of yesterday, the financial threshold of ‘high net worth individual’ will be lifted from an annual income of £100,000 to above £170,000, meaning that many investors will no longer qualify to invest in certain assets.
The row’s origins stretch back to 2001 when government passed a law to certify ‘sophisticated investors’ and high net worth individuals and allow them to access certain riskier investment products.
However, the Treasury moved to hike the threshold for the first time in over 20 years to update it “in line with inflation”.