The Autumn Budget 2017 proved extremely positive for the Enterprise Investment Scheme (EIS), with the Government recognising just how powerful the scheme can be in helping companies to start-up and grow.

Autumn Budget 2017 EIS Guide Enterprise Investment Partners

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Our guide provides an overview to the main announcements within yesterday’s Budget (and how they may affect you and your business). Below we have included the main points announced in the Budget relative to the EIS.

  • The annual investment limit for EIS investors will be doubled from £1 million to £2 million, provided that any amount above £1 million is invested in knowledge-intensive companies.
  • The annual investment limit for knowledge-intensive companies will be doubled from £5 million to £10 million through the EIS and by VCTs.
  • Greater flexibility will be provided for knowledge-intensive companies over how the age limit is applied for when a company must receive its first investment through the schemes. Knowledge-intensive companies will be able to choose whether to use the current test of the date of first commercial sale or the point at which turnover reached £200,000 to determine when the 10-year period has begun.
  • A new knowledge intensive EIS approved fund structure will be consulted upon, with further incentives provided to attract investment.

Additionally, from Royal Assent of the Finance Bill 2017-18, a principles-based test will be introduced into the tax-advantaged venture capital schemes. The new test will ensure that the schemes are focused towards investment in companies seeking investment for their long-term growth and development. The new test will not affect independent, entrepreneurial companies seeking to expand. Tax-motivated investments, where the tax relief provides all or most of the return for an investor with limited risk to the original investment (i.e. preserving an investors’ capital) will no longer be eligible. The government has published a note explaining how the test will work, as an annex to the consultation response. Draft guidance will be published by HMRC alongside the draft publication of the Finance Bill.

View Christian Elmes and Martin Sherwood’s ‘Post-Budget Webinar’ here.

For more information please contact Martin Sherwood on 020 7843 0472 or msherwood@enterprise-ip.com