By ACCA’s Budget team
The reluctance of the banks to lend to business has led the Government to identify the Enterprise Investment Scheme (EIS) and Venture Capital Trust (VCT) scheme as being a potentially valuable existing tax relief which, with a few refinements, could help businesses to access finance.
Schemes like the EIS (Enterprise Investment Scheme) and the VCT (Venture Capital Trusts) are very deserving of extra support from the Treasury. They work well and have good take up. We supported them when they were first introduced and our only issue is that they could be made more accessible. It’s good news that the Chancellor has tried to help improve the schemes, but we need easy to use and flexible schemes.
We know the Office of Tax Simplification has supported the schemes and has recommended a number of changes to make the EIS more attractive to would-be investors and participating companies.
For more detailed guidance on the existing EIS scheme requirements, please click here.
Budget 2011 Changes:
The changes to the EIS and VCT schemes announced in the Budget are as follows:
From 6 April 2011:
The rate of income tax relief for shares subscribed for under the EIS scheme will be increased from 20% to 30%. This relief is given as a “tax reducer”.
From 6 April 2012:
Qualifying conditions for companies:
There are proposed revisions to the limits for qualifying companies eligible to participate in the EIS scheme. The changes are summarised below:
|
Condition |
Pre 6 April 2012 |
Post 6 April 2012 |
|
Number of employees |
Less than 50 |
Less than 250 |
|
Gross assets |
Before EIS investment: £7,000,000 After EIS Investment: £8,000,000 |
Before EIS investment: £15,000,000 After EIS Investment: £TBA |
|
Maximum annual amount of combined EIS and VCT investment |
£2,000,000 |
£10,000,000 |
The annual maximum amount that an individual investor may invest under the scheme will be increased from £500,000 to £1,000,000.
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