Autumn Budget 2017 – EIS and VCT scheme changes (23-11-2017)
Source: HM Revenue & Customs | 22-11-2017
As part of the Budget measures, several changes were announced to both the Enterprise Investment Scheme (EIS) and Venture Capital Trusts (VCT) scheme. These schemes are designed to help smaller higher-risk trading companies to raise finance by offering a range of tax reliefs to investors who purchase new shares in those companies.
The EIS offers generous tax reliefs including 30% income tax relief. The maximum annual amount that an individual can currently invest through the EIS is £1 million. The Chancellor announced that the current limit of £1 million will be doubled to £2 million where any amount above £1m is invested in knowledge-intensive companies.
The VCT scheme offers investor’s income tax relief of 30% on new subscriptions for ordinary shares in VCTs. The maximum amount qualifying for relief is £200,000 in each tax year. No changes were announced to this limit. These generous tax allowances are designed to off-set the fact that making investments in these types of companies can carry a high-risk.
The Chancellor also pledged to increase the annual investment limit for knowledge-intensive companies receiving investments under the EIS and from VCTs, to £10 million from the current limit of £5 million. The lifetime limit will remain the same at £20 million. There will also be changes to the company age limit when knowledge-intensive companies can begin to attract funds.
These changes will have effect on and after 6 April 2018, and will be subject to the normal state aid rules.