Investors in Venture Capital Trusts (VCTs) and Enterprise Investment Schemes (EIS) benefit from various tax reliefs designed to incentivize investment in young, innovative companies.
In its Spring Statement, the Treasury emphasized its commitment to making the UK the premier destination for launching and scaling businesses. It stated:
“The government is dedicated to fostering a thriving and dynamic environment for entrepreneurs and scale-ups as a core part of its growth strategy.
“To support this, it will continue collaborating with leading entrepreneurs and venture capital firms to assess how policy—including tax relief schemes such as the Enterprise Management Incentives Scheme, EIS, and VCT—can best facilitate this mission.
“As part of these efforts, the government will host a series of roundtable discussions with key stakeholders throughout April.”
The VCT and EIS schemes were extended for an additional 10 years last year.
Currently, a company can secure up to £5 million in VCT or other tax-efficient funding per year, with a lifetime cap of £12 million.
Investors who contribute capital to a VCT benefit from a 30% upfront tax relief, and any income or capital gains generated are tax-free, provided the investment is held for at least five years.
Similarly, the EIS offers investors a 30% income tax relief when they invest in “knowledge-intensive” companies, as long as the investment is maintained for a minimum of three years.
