The likelihood of the Finance Bill receiving Royal Asset this month and its inclusion of reforms to Enterprise Investment Scheme (EIS) investment which will focus on investment in higher-risk, knowledge intensive companies rather than lower-risk, capital preservation schemes, has caused a number of comments within the industry.
Andrew Aldridge, Partner, Head of Marketing at Deepbridge Capital, added his view: “Far from being a cut to EIS and VCTs, the Chancellor’s November budget (and the outcomes of the Patient Capital Review) were actually an endorsement of the EIS sector as a driver for economic growth. The Government, quite rightly, has reinforced the requirement for investors to take appropriate risk in order to benefit from the generous tax reliefs available under the EIS.
“In part, the Government is seeking to provide greater funding for ‘knowledge intensive’ companies such as technology innovations, the digital economy and life sciences as these are recognised as sectors which could create significant numbers of skilled jobs and innovations to drive exports. With the Chancellor increasing the speed with which ‘knowledge intensive’ companies can receive EIS funding, and by increasing the annual limit that individual investors can invest in to such companies, he is seeking to bridge the recognised gap between start-up funding and scale-up funding.
“In effect, with the Finance Bill receiving Royal Assent, the EIS sector is being returned to how it was originally envisaged and these reforms should ensure EIS remains the envy of the world and UK investors should be delighted the Chancellor has emphasised his ongoing support for the scheme.”