On the HMRCs latest annual EIS statistics Alex Davies, CEO and founder of Wealth Club said: “It is disappointing to see the amount raised through EIS decline, even if it’s a small fall from grace. However it doesn’t come as a surprise, the government’s continual tinkering with the rules has brought uncertainty for both investors and companies looking to raise money. Indeed many of the types of companies that had expanded previously using EIS money are no longer eligible to do so.
“Whilst the amount raised by EIS in the most recent figures has fallen slightly, we believe over the long term demand will grow significantly. Pension and buy to let changes, as well as the ever increasing dividend tax, means that wealthier investors have very few other options left to save simply and tax efficiently. EIS and VCTs still offer that.
“Whilst EIS are certainly a very attractive option for wealthier investors, a tax dodge they are not. The net impact on the economy is far greater than any loss in initial tax revenue. EIS provides valuable funding (which banks won’t give) to entrepreneurs looking to start and scale up businesses. These businesses create thousands of jobs, thousands of tax payers and are vital for encouraging economic growth. Without such schemes some of the UK’s most exciting companies and in some cases boring but equally successful companies, may never have made it.”