There is a worrying lack of take-up of EIS outside London and the South East.
So says new research from Moore Stephens, the UK’s ninth largest independent accounting and consulting network. It revealed that just 33% of investments through the scheme were outside of London and the South East, despite these regions representing 62% of the UK economy.
Only £610m out of £1.9bn EIS investments went to businesses in regions outside of London and the South East.
Moore Stephens made the point that it is worrying that businesses in regions whose economies are lagging far behind London and the South East are not taking advantage of this Government tax break. They believe that both central and regional governments could proactively encourage more businesses to take up relief schemes such as the EIS to help grow their local economies and close the wealth gap with London and the South East.
Moore Stephens said that SMEs outside of London and the South East looking to grow their businesses to the next level may be missing out on a vital source of funding. The EIS statistics suggest that in many parts of the country, businesses are not aware of the scheme.
The key problem, argued Moore Stephens, is that there is a low level of knowledge about EIS outside of London, partly because there are fewer corporate finance and advisory companies in those areas. For example, businesses in the North East and North West of England only claimed 6% of the total amount of EIS combined, despite the regions making up 13% of the UK economy. Scottish businesses only received 3% of EIS funds.
It is an identical picture with the Seed Enterprise Investment Scheme (SEIS), aimed at start-up businesses, where regions outside of London and the South East only attracted 34% of all investments. Moore Stephens says that is important SMEs outside of London are made aware of the scheme, particularly in regions where the Government is desperate to deliver more economic growth.
Partner at Moore Stephens Tim Fussell said: “It is extremely concerning that SMEs outside of London are failing to take advantage of the EIS break.
“If regional economies are to compete with London and the South East, schemes like the EIS need to be utilised to their fullest extent. The latest statistics highlight that this is just not happening.
“Regional growth projects such as the Northern Powerhouse could really benefit from increased use of schemes like the EIS. It is vital the Government promotes the EIS and that business owners make themselves aware of it, so its benefits are felt across the UK.”