As we enter a new year and approach the tax year end, Christiana Stewart-Lockhart, Director General of the Enterprise Investment Scheme Association (EIS Association), looks back at 2024, and shares her positive outlook for EIS and SEIS investments.
Christiana said:
2024 was a challenging year for businesses globally, but the UK continues to be a world leader when it comes to startups, largely due to schemes like the EIS and SEIS. Since the Autumn Budget, we have seen renewed interest in the EIS and SEIS, driven in part by changes to CGT and IHT. More investors are now exploring the EIS as part of a diversified portfolio and this government scheme offers the opportunity to invest in high risk, high reward startups whilst benefiting from significant tax reliefs including 30% income tax relief and CGT exemption.
Unfortunately, there are many potential investors who are missing out, largely due to a lack of awareness about the schemes. One common misconception is that the EIS and SEIS are only for those investing very large sums. And, whilst there are a significant number of very large investors, it is important to recognise that the EIS has helped to democratise access to early stage investing and we can see from HMRC data that the majority of those using the EIS invest up to £10,000 each year.
Encouragingly, despite the economic challenges in 2024, we have seen green shoots emerging with a number of new S/EIS funds having recently launched. This may be partly driven by the recent extensions to the SEIS limits as well as the 10 year extension to the EIS, which was confirmed by the Government last September. With greater awareness and continued government backing, the EIS and SEIS will continue to play a crucial role in driving innovation and supporting economic growth across the UK.