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 ...
The extension of EIS and VCT until 2035 will provide investors with many great opportunities!
The Enterprise Investment Scheme (EIS) provides tax incentives in the form of Income Tax and Capital Gains Tax (CGT) reliefs to investors who invest in small, unquoted, trading companies.
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 a tax-free income.
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 10 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.
"The extension of these schemes aligns with the government's commitment to boosting the UK's tech and innovation sector!"
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.
Until next time ...
HELEN BEAUMONT
Would you like to know more?
If anything I've written in this blog post resonates with you and you'd like to discover more about EIS and VCT and how you can support early-stage businesses using these schemes, do give me a call on 01908 774323 and let's see how I can help you.
Helen brings the personal tax planning experience of the top 20 tax companies to Essendon. Formerly of MacIntyre Hudson (with 45 offices nationwide), Helen worked at Chancery for more than 10 years before joining Essendon as the personal tax specialist.
Tax Planning can make a considerable difference to your tax liability. Helen has specialist knowledge and experience in tax planning and uses every opportunity to minimise your tax bill is utilised. By analysing your investments, income, profit and expenditures, Helen will provide strategic tax planning expertise that could offer significant savings, whilst delivering clear, honest advice and guidance.
When Helen is not at Essendon she spends time with her young son and likes going on long walks with the family dog.
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