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Hunt tipped to reverse angel income threshold rise

Gillian Fleming
Gillian Fleming: fantastic news (pic: Terry Murden / DB Media Services)

A planned change to the income thresholds around angel investor protection that could have been particularly damaging to women and ethnic groups is expected to be reversed in the Chancellor’s Budget.

Sources say Jeremy Hunt will drop plans to raise the minimum income required for protection from £100,000 to £170,000.

The upgrade was designed to ensure individuals have an adequate income to support their investments.

But women and ethnic groups warned their engagement with growth firms would suffer as they tend to have lower incomes and therefore the pool of investment from them would shrink.

It is understood that Mr Hunt will revert to the previous thresholds of £100,000 of income and £250,000 of net assets.

In a letter to the Treasury during the consultation period, the Startup Coalition, the Entrepreneurs Network and the UK Business Angels Association, described the planned changes as “anathema to the trailblazing startup ecosystem that has been built today”.

Roderick Beer, managing director of the UK Business Angels Association, said: “It is done. The new threshold increase will be reversed.”

He said 40 pages of insight and data and four letters had been submitted to the Chancellor and the Treasury and he praised the work of a coordinated campaign group.

Dom Hallas, executive director of the Startup Coalition, said: “Very pleased to hear that HM Treasury plans to reverse the changes to angel investment rules and the HNWI threshold to make sure angel investment in particular to female and underrepresented founders continues to flow.

“I’ve learned not to count our policy chickens until we formally hear them from the Chancellor on budget day – but we’re delighted to see the progress – and we’re confident we’ll now be see this over the line next week.

“This wouldn’t have changed with the pressure created – and in particular the pressure created by a fantastic group of female founders and investors who would have been most directly impacted.

“Thanks to all those involved from the folks that have worked on the multiple different campaigns and to the nearly 3000 campaigning friends from the ecosystem who signed our Startup Coalition open letter and any of the others.”

Gillian Fleming, co-founder of women’s angel group Mint Ventures, described it as “absolutely fantastic news”.

She added: “Thank you to UK Business Angels Association for leading on this and to every person that signed the petition and called it out.”

Government figures on income for 2020-21 would have cut the number of eligible investors in Scotland by 72% from 60,000 to 17,000. The number of female investors would fall by 75%, from 14,000 to 3,500. In Northern Ireland there are zero females in the higher earnings bracket.

The Treasury said the extra protections has been introduced amid a rise in the use of retail investment platforms. Exemption rules for high-net-worth individuals have not been updated since 2005.

Andrew Noble, a partner at Edinburgh-based angel group Par Equity, warned that the proposed changes to the Angel Investor Threshold could have had “damaging unintended consequences for technology ecosystems outside of London, and for underrepresented founders.”

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