On August 14, the European Union’s executive branch announced that it would not oppose the UK government’s decision to extend the existing Venture Capital Trust (VCT) and Enterprise Investment Scheme (EIS) regimes by ten years, from April 5, 2025.
This approval is part of the Brexit withdrawal agreement and allows VCTs and EIS to continue offering their current tax reliefs until April 5, 2035. However, additional approval will be required beyond this date to maintain these benefits.
The European Commission stated that extending the sunset clause to April 5, 2035, and setting aside an estimated budget of £100 million for the ten-year period, is adequate to achieve the schemes’ goals. These objectives include creating a funding environment that encourages intermediaries to invest over a longer time horizon and build solid track records. This decision is seen as a step towards strengthening the UK’s investment landscape by providing greater stability and incentives for long-term investment strategies.
The European Commission’s confirmation follows the UK government’s announcement in last November’s Autumn Statement to extend the existing VCT/EIS sunset clause by an additional decade. This came just a month after the Treasury initially extended it to April 2025. The legislative change was subsequently incorporated as Section 11 in the Finance Act 2024.
A spokesperson for HM Treasury stated that the UK government is currently “in the advanced stage of finalizing the extension of the reliefs,” with a formal update expected to be presented to Parliament after the recess in September.
