The UK government has extended the Enterprise Investment Scheme (EIS) and the Venture Capital Trust (VCT) scheme for 10 years until 5th April 2035. These schemes, which were originally meant to end in 2025, are designed to channel funding to new or young companies through tax-relief incentives, creating jobs, driving innovation and stimulating economic growth. The government believes this move will enable start-ups and entrepreneurs to flourish and contribute significantly to UK economic development.
James Murray, Exchequer Secretary to the Treasury, stated, “By extending these schemes for 10 years, we are providing the stability and support startups need to fuel growth in all of Britain.” Industry insiders have welcomed the announcement, praising the long-term security the extensions provide in driving investor confidence. Michael Moore, CEO of the British Venture Capital Association, said, “This move is a very positive step in ensuring the UK remains competitive in a crowded global market.”
The EIS and VCT schemes provide investors with upfront income tax relief of up to 30% and an exemption from capital gains tax on any profits from the sale of shares. Introduced in 1994, the EIS offers tax relief to individuals who invest in qualifying companies, with investors able to invest up to £1m, or £2m if the shares are in knowledge-intensive companies. The VCT, first introduced in 1995, allows individuals to invest up to £200,000 per year in new VCT shares for early-stage trading companies. Dividends received from VCTs are tax-free.
Richard Stone, CEO of the Association of Investment Companies, praised the move, saying that it would allow VCTs to raise more capital and invest with greater confidence in order to help the government meet its economic growth and job-creation ambitions. These schemes offer relief to investors who invest in early-stage companies carrying significant risks. The government offers loss relief through the EIS to investors who hold shares for at least two years.
