Tax Breaks Extended to 2035
In a move that will be music to the ears of start-ups and entrepreneurs, the Treasury has confirmed the extension of the Enterprise Investment Scheme (EIS) and Venture Capital Trust (VCT) tax reliefs until April 2035. This extension is designed to encourage investment into new or young companies through tax-relief incentives, fostering innovation, creating jobs, and stimulating economic growth.
The EIS offers tax relief to individuals who invest in new shares in qualifying companies, with investors able to invest up to £1 million (or £2 million if the shares are in knowledge-intensive companies). To qualify for relief, shares must be held for at least two years. On the other hand, VCTs are listed companies that invest in early-stage trading companies on behalf of individuals, enabling them to invest up to £200,000 per year in new VCT shares with dividends paid tax-free.
These schemes have been highly successful, raising £2.9 billion in funds during 2022-23 and supporting 1,280 first-time EIS users. The extension announced by Exchequer Secretary James Murray will provide the necessary stability and support for high-risk, early-stage businesses in the UK, driving long-term growth and development.
The move has been welcomed by business leaders as an important contributor to driving growth. British Venture Capital Association (BVCA) CEO Michael Moore praised the decision, stating that it would allow investors to focus on investing with confidence, knowing that these schemes have a long-term future.
With this extension in place, start-ups and entrepreneurs can now look forward to continued support from investors and a more favorable environment for innovation and growth. The VCT scheme will also be able to raise further capital and invest with confidence, ensuring that the government’s ambitions of growing the economy, supporting innovation, and creating jobs are met.
For those considering investing in start-ups or early-stage companies, now is an opportune time to take advantage of these tax-relief incentives. With the EIS and VCT schemes extended until 2035, there has never been a better time to support Britain’s budding entrepreneurs and help drive economic growth.
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