Entrepreneurs and start-ups are set to benefit from the extension of two government investment schemes.
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 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.
Exchequer Secretary to the Treasury, James Murray, 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.”
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 £1million, or £2million 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 £41billion raised through the schemes since the EIS was launched in 1994. The schemes continue to generate vast amounts of investment, with £2.9billion of funds raised across the schemes in 2022-23 and 1,280 companies using the EIS for the first time over this period.