In a letter to the Treasury Committee, Financial Secretary to the Treasury Victoria Atkins and Economic Secretary Andrew Griffith have indicated that the sunset clauses for the enterprise investment scheme and venture capital trusts will be extended past the current 6 April 2025 end date: ‘The chancellor has already stated his firm intention to extend the sunset clauses and will provide further details on the schemes beyond 2025 at a future fiscal event.’
Welcoming the Treasury ministers’ confirmation, the Enterprise Investment Scheme Association (EISA) noted that the EIS alone accounts for around £2.3bn of investment into nearly 5,000 start-up businesses every year, and that ‘an end to the scheme would be disastrous for many of the country’s key high growth businesses across many sectors including medicine and technology’.
Christiana Stewart-Lockhart, director general of the EISA, emphasised the importance of certainty for business: ‘The current challenge is that it is difficult for entrepreneurs to plan for the next three years without the certainty that the EIS would be available for their next fund raise. Typically, start-ups have an 18-month cash runway and that takes us past the current end to the EIS. The next fiscal event in November provides the government with a great opportunity to boost confidence and investment in these early stage businesses, by providing further details around an extension to the world-leading enterprise investment scheme.’
The UK government has also responded to recommendations on the venture capital schemes put forward by the Treasury Committee in July 2023. Key points from the government’s response include:
extending the qualifying company age limits for the schemes is not the best way to address the London-centric concentration of venture capital investment and might take investment away from those businesses the schemes are designed to target;
the government does not intend to consult on increasing the funding limits for EIS and VCTs to help businesses scale up, although will keep the limits under review;
the government does not intend to make provision of diversity statistics an eligibility requirement for EIS, SEIS and VCT tax reliefs. Individuals claim relief through the self-assessment tax return and expecting them to report data on the companies in which they have invested would be ‘challenging’, as they would not necessarily have the data or any right to receive it. Equally, for companies receiving funding, disclosure of data ‘would introduce legal complexity as well as further administrative burdens’;
the government rejects the proposal to require organisations to either become signatories to the Women in Finance Charter and Investing in Women Code or adopt a ‘comply or explain’ policy in relation to both – again principally on grounds that this could create an undue burden on early-stage companies; and
on the creation of funds which promote greater diversity in venture capital allocation, the government points to existing initiatives on the allocation of funds by the British business bank to fund managers which ‘specifically target and fund a diverse network of founders’.
In a letter to the Treasury Committee, Financial Secretary to the Treasury Victoria Atkins and Economic Secretary Andrew Griffith have indicated that the sunset clauses for the enterprise investment scheme and venture capital trusts will be extended past the current 6 April 2025 end date: ‘The chancellor has already stated his firm intention to extend the sunset clauses and will provide further details on the schemes beyond 2025 at a future fiscal event.’
Welcoming the Treasury ministers’ confirmation, the Enterprise Investment Scheme Association (EISA) noted that the EIS alone accounts for around £2.3bn of investment into nearly 5,000 start-up businesses every year, and that ‘an end to the scheme would be disastrous for many of the country’s key high growth businesses across many sectors including medicine and technology’.
Christiana Stewart-Lockhart, director general of the EISA, emphasised the importance of certainty for business: ‘The current challenge is that it is difficult for entrepreneurs to plan for the next three years without the certainty that the EIS would be available for their next fund raise. Typically, start-ups have an 18-month cash runway and that takes us past the current end to the EIS. The next fiscal event in November provides the government with a great opportunity to boost confidence and investment in these early stage businesses, by providing further details around an extension to the world-leading enterprise investment scheme.’
The UK government has also responded to recommendations on the venture capital schemes put forward by the Treasury Committee in July 2023. Key points from the government’s response include:
extending the qualifying company age limits for the schemes is not the best way to address the London-centric concentration of venture capital investment and might take investment away from those businesses the schemes are designed to target;
the government does not intend to consult on increasing the funding limits for EIS and VCTs to help businesses scale up, although will keep the limits under review;
the government does not intend to make provision of diversity statistics an eligibility requirement for EIS, SEIS and VCT tax reliefs. Individuals claim relief through the self-assessment tax return and expecting them to report data on the companies in which they have invested would be ‘challenging’, as they would not necessarily have the data or any right to receive it. Equally, for companies receiving funding, disclosure of data ‘would introduce legal complexity as well as further administrative burdens’;
the government rejects the proposal to require organisations to either become signatories to the Women in Finance Charter and Investing in Women Code or adopt a ‘comply or explain’ policy in relation to both – again principally on grounds that this could create an undue burden on early-stage companies; and
on the creation of funds which promote greater diversity in venture capital allocation, the government points to existing initiatives on the allocation of funds by the British business bank to fund managers which ‘specifically target and fund a diverse network of founders’.
