The government has confirmed that the EIS and VCT schemes have been extended until 2035. These schemes have been crucial in driving investments into small businesses and startups, providing much-needed support for entrepreneurs in the UK ...
On the other hand, the Venture Capital Trust (VCT) scheme allows individuals to invest in a portfolio of small businesses through a VCT, providing them with Income Tax relief and the opportunity to defer CGT on other assets.
The government's decision to extend these schemes until 2035 is a clear indication of its commitment to supporting the growth of small businesses and startups in the UK. It also provides much-needed stability and confidence for investors, knowing that these schemes will continue to be available for the next 15 years!
But that's not all as the government has also made some tweaks to the rules, making it easier for investors to claim loss relief through EIS. Now, investors can claim loss relief as long as they hold the shares for a minimum of two years, rather than the previous requirement of three years. This change will encourage more investors to take the plunge and support early-stage businesses, knowing that they have some protection in case things don't go as planned.
The impact of EIS and VCT schemes on the UK's entrepreneurial ecosystem cannot be overstated. In 2022-23 alone, these schemes raised a whopping £2.9 billion, with 1,280 companies using EIS for the first time. This not only provides much-needed capital for these businesses, but also helps to create jobs and drive economic growth in the country.
VCTs have been crucial in providing support to businesses in their early stages, where traditional funding may not be readily available. These investments not only provide financial support, but also bring in valuable expertise and guidance from experienced investors, which can be a game-changer for startups.
With the country's exit from the EU, it is more important than ever to support and nurture homegrown businesses and talent. EIS and VCT schemes provide a vital source of funding for innovative startups, helping them to compete on a global scale and drive the country's economic growth.
With a lifetime limit of £12 million, VCTs have been a popular choice for many investors looking to diversify their portfolios and support early-stage businesses.
The extension until 2035 will provide them with many more opportunities.
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