How Might the Patient Capital Review and Autumn Budget Change EIS and SEIS?

  • On November 20, 2017
  • By GrowthInvest Admin

EISA asked three financial planning professionals to give us their views on how EIS and SEIS might be affected by the Patient Capital Review and the impending Autumn Budget – and their thoughts and insights are below.

The experts:

Ewoud Karelse

Ewoud Karelse is Head of Tax Advantaged Investments at Tilney, responsible for research and selection of VCTs, SEIS, EIS, and IHT Business Relief qualifying investments for use by Tilney Financial Planners and Investment Managers. Ewoud also writes VCT research for Bestinvest.

Neil Cole

Neil Cole is the Director of Wealth Planning Product Development & Management at UBS Wealth Management. He has individual responsibility for the tax efficient investment world, focused on EIS, VCTs, inheritance tax, ISAs, and other relevant product types, and provides recommendations to UBS Advisers on which of these products should be offered.

Declan McAndrew

Declan McAndrew is Head of Investment Research at Foster Denovo, where his emphasis is on advising the firm’s IFA partners on two broad business types: private clients, for whom EIS may be particularly suitable, and larger clients such as pension schemes and charities. Currently focused on developing Foster Denovo’s overarching investment proposition.

How might the Patient Capital Review and Autumn Budget change EIS and SEIS?

Ewoud:

I think that the Patient Capital Review missed the point in a few areas, and could have benefitted from input from more industry specialists; particularly as it perpetuated some misconceptions around EIS and VCTs. However, I cannot just blame the Government – ultimately, it is the responsibility of EISA, AIC, BBCA/VCA and the fund managers themselves to be vocal about the broader benefits to smaller companies in particular, and the economy in general, of investments made via the schemes.

The limitation of the PCR is that it put too much emphasis on the handful of large product providers that have focused on asset-based trading companies and the three-year minimum holding period for tax relief, and that it did not acknowledge sufficiently the majority of EIS fund managers who have operated within the spirit of the legislation for many years.

Regarding the Budget, I am cautiously optimistic that there will be no significant changes to affect EIS and SEIS other than perhaps a further sharpening up of the rules to encourage more investments in companies with a high growth potential. I hope that the Government continues to see there is a huge benefit to helping UK small businesses – not just start-ups but also other younger and early stage companies.

Longer term I am hoping for less government intervention generally. I do not think the establishment of Government Funds is necessarily the best use of taxpayer money. I think it is better to continue to encourage investors and professional fund managers to back exciting new and young companies to achieve the targets the Government has set for them which include more employment and a positive contribution to the economy.

Speaking for Tilney, we find most of our investors like their EIS investments; will add to their EIS portfolios on a regular basis, and will keep reinvesting the proceeds from their investments into new EIS qualifying companies.

Read all the experts’ thoughts here.

Source: EISA

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