Commenting on the Budget and the implications for the EIS sector, Hugi Clarke, Director at Foresight Group, said: “The Chancellor’s decision to remove low risk EIS is designed to refocus these investments away from ‘low risk’ structures and towards innovative companies with the opportunity for growth. EIS has been acknowledged as a key component in supporting these businesses as evidenced by the doubling of investment limits for technology based ‘knowledge intensive’ companies.
“Importantly, the changes leave the unique tax advantages of this vehicle in place. An EIS remains attractive to those investors who can take advantage of the tax benefits and accept the associated risks. The ability to access 30% income tax relief, 40% IHT relief and up to 28% CGT deferral while enjoying the potential for significant upside compares favourably with ISA and pension alternatives and will continue to be an attractive part of a diversified portfolio.
“VCT and EIS remain a unique investment opportunity while just as importantly continuing to support UK business. The attraction of these products has meant that between April and October VCT inflows were up 100% against the same period last year while total fundraising is expected to exceed £800 million this year, the sector’s highest ever.”
