Thousands of entrepreneurs and startups are set to benefit from the extension of two leading government investment schemes.
The Enterprise Investment Scheme (EIS) and the Venture Capital Trust (VCT) scheme were both set to end on 6th April 2025 and have now been extended by 10 years to 5th 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 Labour government, which swept to power this summer at the expense of the previous Conservative administration, said the move would help startups to flourish, growing the economy and ‘rebuilding Britain’.
“Startups and entrepreneurs are a driving force for greater investment, more jobs, and economic growth in the UK. By extending these schemes for 10 years, we are providing the stability and support they need to help us make every part of Britain better off,” said Exchequer Secretary to the Treasury James Murray.
Industry leaders praised the announcement.
Michael Moore, chief executive of the British Venture Capital Association, 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 £2m 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 VCTs are also tax-free.
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