EIS and VCT reliefs extended and SEIS and CSOP incentives for business investment widened.
As part of the UK Government’s growth strategy in the private sector, Chancellor Kwasi Kwarteng has extended the Enterprise Investment Scheme (EIS) and the Venture Capital Trust Scheme (VCT) beyond 6 April 2025. Extension of such schemes, which offer general tax reliefs to individual investors in small businesses, will potentially minimize significant gaps in early stage equity finance.
Similarly the scope of the Seed Enterprise Investment Scheme (SEIS) and of the Company Share Option Plan (CSOP) has been widened.
From 6 April 2023, the amount of investment that companies can raise through the SEIS will increase from £150,000 to £250,000 with the qualifying criteria being also widened as follows:
The gross asset limit increased from £200,000 to £350,000; and
The limit on the age of the company’s qualifying trade increased from 2 to 3 years.
From the investor’s perspective, the annual limit on the amount of SEIS investments that an investor can make will be doubled to £200,000 per tax year. With the percentage of the investment on which tax relief can be sought is 50%, this allows investors to avail of potentially £100,000 worth of tax relief per year, plus associated capital gains reinvestment relief, provided of course that conditions are met.
With regards to the CSOP and from 6 April 2023, the limit on the value of shares that can be awarded to an employee under such scheme will be doubled to £60,000. The government hopes that this will allow businesses to attract and retain talent. The government has also removed the condition that limits the types of shares eligible for inclusion within the scheme, to better align such scheme with the Enterprise Management Incentive scheme (EMI) and to allow more companies to access the CSOP for growth purposes.