Thousands of entrepreneurs and start-ups are set to benefit from
the extension of two leading government investment schemes to
help them grow the economy and rebuild Britain.
The Enterprise Investment Scheme (EIS) and the Venture Capital
Trust (VCT) scheme were both set to end on 6 April 2025 and have
now been extended by ten years to 5 April 2035.
The schemes are designed to encourage investment into new or
young companies through tax-relief incentives, encouraging
innovation, creating jobs and stimulating economic growth.
The government is fully focused on restoring economic stability,
taking the tough decisions to fix the foundations of our economy,
rebuild Britain and make every part of our country better off.
Exchequer Secretary to the Treasury, , 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.”
The extension, announced via a Written Ministerial Statement
today in the House of Commons, will provide the confidence to
continue investment into high-risk, early-stage businesses in the
UK, supporting long-term growth and the development of their
trades.
Industry leaders have praised the announcement.
BVCA Chief Executive said:
“It is excellent news that the government is moving so quickly.
This means that investors can now focus on what they do best,
investing, safe in the knowledge that these schemes now have the
long-term security needed to drive investor confidence.
“The BVCA has long advocated for this move as these schemes play
a vital role in supporting early-stage companies that have the
highest growth potential and crowding in further investment
through the growth cycle.
“As the third largest VC market in the world, the UK has proven
the success of EIS and VCT, and with many jurisdictions now
following our lead, it is vital that the UK retains its
competitive edge in a competitive world and this move is a very
positive step in that direction.”
Richard Stone, Chief Executive of the Association of Investment
Companies, said:
“VCTs invest in the UK's most exciting early-stage companies.
They help entrepreneurs transform their businesses. Extending the
VCT scheme until 2035 will allow the sector to raise further
capital and invest with confidence. This will ensure VCTs can
help the government secure its ambitions to grow the economy,
support innovation and create jobs.”
Both schemes offer incentives to investors of up to 30% upfront
income tax relief and an exemption from capital gains tax on any
profits made after the sale of shares.
The EIS, introduced in 1994, offers tax relief to individuals
that invest in new shares in qualifying companies with investors
able to invest up to £1 million, or £2 million if the shares are
in knowledge-intensive companies, which focus on research and
development.
The government recognises the risk that investment in early-stage
companies carries, so investors are offered loss relief through
the EIS as long as shares are held for at least two years.
First introduced in 1995, 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 VCT's are
also tax-free.
Both schemes have already seen significant success with over £41
billion raised through the schemes since the EIS was launched in
1994. The schemes continue to generate vast amounts of
investment, with £2.9 billion of funds raised across the schemes
in 2022-23 and 1,280 companies using the EIS for the
first time over this period.
The Treasury has made regulations to bring this into effect which
have come into force.
