Press release: Boost for UK growth as start-up investment schemes extended
Government extends two leading investment schemes 10 years from April
2025 to April 2035 as part of its relentless pursuit of
growth.
Extensions will support start-ups and entrepreneurs to
help them grow and rebuild Britain.
The change will build on
over £41 billion of investment generated over 30
years.
Thousands of entrepreneurs and start-ups are set to
benefit from the extension of two leading government investment
schemes to help them grow the economy and rebuild Britain.
The Enterprise Investment Scheme (EIS) and the Venture Capital
Trust (VCT) scheme were both set to end on 6 April 2025 and have now
been extended by ten years to 5 April 2035.
The schemes are
designed to encourage investment into new or young companies through
tax-relief incentives, encouraging innovation, creating jobs and
stimulating economic growth.
The government is fully focused
on restoring economic stability, taking the tough decisions to fix the
foundations of our economy, rebuild Britain and make every part of our
country better off.
Exchequer Secretary to the Treasury,
James Murray, said:
“Our entrepreneurs are a driving force for
economic growth, creating jobs and boosting investment. Championing
schemes with proven success is vital in our mission to support the
innovators to help rebuild Britain and make every part of the country
better off. ”
The extension, announced via a Written
Ministerial Statement today in the House of Commons, will provide the
confidence to continue investment into high-risk, early-stage
businesses in the UK, supporting long-term growth and the development
of their trades.
Industry leaders have praised the
announcement.
BVCA Chief Executive Michael Moore said:
“It is excellent news that the government is moving so
quickly. This means that investors can now focus on what they do best,
investing, safe in the knowledge that these schemes now have the long-
term security needed to drive investor confidence.
“The BVCA
has long advocated for this move as these schemes play a vital role in
supporting early-stage companies that have the highest growth
potential and crowding in further investment through the growth cycle.
“As the third largest VC market in the world, the UK has
proven the success of EIS and VCT, and with many jurisdictions now
following our lead, it is vital that the UK retains its competitive
edge in a competitive world and this move is a very positive step in
that direction. ”
Richard Stone, Chief Executive of the
Association of Investment Companies, said:
“VCTs invest in the
UK’s most exciting early-stage companies. They help entrepreneurs
transform their businesses. Extending the VCT scheme until 2035 will
allow the sector to raise further capital and invest with confidence.
This will ensure VCTs can help the government secure its ambitions to
grow the economy, support innovation and create jobs. ”
Both
schemes offer incentives to investors of up to 30% upfront income tax
relief and an exemption from capital gains tax on any profits made
after the sale of shares.
The EIS, introduced in 1994, offers
tax relief to individuals that invest in new shares in qualifying
companies with investors able to invest up to £1 million, or £2
million if the shares are in knowledge-intensive companies, which
focus on research and development.
The government recognises
the risk that investment in early-stage companies carries, so
investors are offered loss relief through the EIS as long as shares
are held for at least two years.
First introduced in 1995,
VCTs are companies listed on the UK’s stock exchange that invest in
early-stage trading companies on behalf of people, enabling
individuals to invest up to £200,000 per year in new VCT shares.
Dividends received from VCT’s are also tax-free.
Both schemes
have already seen significant success with over £41 billion raised
through the schemes since the EIS was launched in 1994. The schemes
continue to generate vast amounts of investment, with £2. 9 billion of
funds raised across the schemes in 2022-23 and 1,280 companies using
the EIS for the first time over this period.
The Treasury has
made regulations to bring this into effect which have come into force.