Start-up investment schemes extended for 10 years
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Posted: Wed 4th Sep 2024
The Enterprise Investment Scheme (EIS) and the Venture Capital Trust (VCT) scheme, which were due to end on 6 April 2025, have been officially extended to 5 April 2035.
The much praised schemes are designed to encourage investment into new or young companies by tax-relief incentives.
Investors can claim up to 30% upfront income tax relief and an exemption from capital gains tax on any profits made after the sale of shares.
Introduced in 1994, EIS applies to new shares in qualifying companies. Investors can provide up to £1 million, or £2 million if the shares are in knowledge-intensive companies, which focus on research and development.
The EIS, and the Seed Enterprise Investment Scheme for early stage businesses, have provided £32 billion of private investment to 56,000 startups over the past three decades.
VCTs are companies listed on the UK's stock exchange that invest in early-stage trading companies on behalf of people, enabling individuals to invest up to £200,000 per year in new VCT shares. Dividends received from VCTs are also tax-free.
The schemes originally had a sunset clause for April 2025, but there were several demands, including by Enterprise Nation, to extend them. Their extension to 2035 was finally announced by the former Conservative government in the 2023 Autumn Statement.
That has now been officially confirmed in a written statement by James Murray, exchequer secretary to the Treasury. He said:
"Our entrepreneurs are a driving force for economic growth, creating jobs and boosting investment. Championing schemes with proven success is vital in our mission to support the innovators to help rebuild Britain and make every part of the country better off."
Daniel Woolf, head of policy and government relations at Enterprise Nation, said:
"We welcome the government's announcement to extend the Enterprise Investment Scheme, and the Venture Capital Trust scheme to April 2035. These initiatives are vital lifelines for entrepreneurs looking to scale and innovate in today's competitive market.
"As argued in Enterprise Nation's report, Access all areas: Finance, retaining the EIS and VCT schemes will significantly boost the growth potential of UK start-ups.
"With this move, the government is sending out a strong and positive signal that it is committed to backing entrepreneurs and fostering innovation. However, we must caution that if we see increases in Capital Gains Tax in the Autumn Budget, EIS and SEIS will become an even more crucial source of early stage investment."
Enterprise Nation founder Emma Jones is speaking at the 30th anniversary celebration of EIS, organised by the Enterprise Investment Scheme Association, on 18 September in London.
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