Mixed reaction for Osborne's first Budget

Chancellor George Osborne at 11 Downing Street before delivering his first Budget

George Osborne’s first Budget as chancellor has had a mixed reception from the pharma and biotech sectors.

The BioIndustry Association (BIA) called it a “missed opportunity”, saying it fell short of helping to develop an innovation-driven economy.

Specifically, the BIA believes upping capital gains tax for higher rate tax payers will stifle investment in the small- and medium-sized businesses that proliferate in the biotech sector.

“The decision to increase capital gains tax could be harmful to the UK bioscience sector in terms of attracting interest from investors in small, early-stage companies,” said BIA chief executive Nigel Gaymond.

Increasing entrepreneurs’ relief from £2 million to £5 million will be of little value for investors in bioscience, the BIA added, because most investors would not hold the minimum 5% of the company they would need in order to benefit from this relief.

However, the BIA says it is encouraged by Osborne’s pledge to consult with business to review the taxation of intellectual property, the support R&D tax credits provide for innovation and the proposals of the Dyson Review.

“As always, the devil is in the detail and I very much look forward to hearing from the chancellor in response to our representations to him in May and June,” concluded Gaymond.

Meanwhile the ABPI has been more receptive of the Budget, in particular welcoming the chancellor’s decision to reduce corporation tax.

Other countries have up to now been able to offer lower rates than the UK to attract, in particular, pharma manufacturing to their shores, the ABPI said.

Retaining the ‘patent box’ proposed under Labour also met with the pharma association’s approval. The scheme was the Office for Life Sciences’ idea to apply a 10% rate of corporation tax to UK-based patent income from April 2013, which should in theory strengthen incentives for companies to invest in innovative activity here.

“We are delighted that the chancellor has decided to retain this important initiative as we believe it will make a significant contribution to the UK’s ability to retain its world-leading position in an increasingly competitive global environment,” said ABPI director general Richard Barker.

The ABPI also gave the thumbs up to the decision to cut the small profits tax rate to 20%, saying this would help stimulate smaller businesses.

Adam Hill