In his important ‘mini-budget’ statement of 23rd September, Chancellor Kwarteng, amongst a host of other measures, confirmed his on-going support for the Enterprise Investment Scheme, Venture Capital Trusts and the Seed Enterprise Investment Scheme by extending the schemes beyond the 2025 ‘Sunset Clause’.
“We want this country to be an entrepreneurial share owning democracy. The Enterprise Investment Scheme and Venture Capital Trusts, we will extend beyond 2025. The Seed Enterprise Investment Scheme and Company Share Option Plans, we will increase the limits to make them more generous. Crucial steps on the road to making this a nation of entrepreneurs.” Chancellor Kwasi Kwarteng, 23rd September 2023
Industry experts have been sharing their views of todays’ news with GBI and IFA Magazine as follows:
The Enterprise Investment Scheme Association (EISA), through its present Director General Christiana Stewart Lockhart and its former Director Mark Brownridge, has campaigned for many years to ensure the future of such schemes.
Christiana Stewart Lockhart wrote this morning in a letter to EISA members, that she was “ delighted that this morning the Chancellor has committed to extending the EIS beyond the 2025 sunset clause. This is fantastic news for the industry and shows this government’s commitment to supporting entrepreneurs. I’d like to thank all EISA members for their contributions and input into this work”.
She also wrote that the “ From April 2023, companies will be able to raise up to £250,000 of SEIS investment, a two-thirds increase. To enable more companies to use SEIS, the gross asset limit will be increased to £350,000 and the age limit from 2 to 3 years. To support these increases, the annual investor limit will be doubled to £200,000. These changes will help over 2,000 companies a year that use the scheme to grow”.
Martin Fox , Chair of EISA’s Research, Education and Marketing Committee, commented for GBI that he was: “obviously delighted that the campaign run by EISA had been so effective and is hopeful that far more advisers will now be looking more closely at these schemes as investments for their clients”
The Association of Investment Companies (AIC) has also warmly welcomed the Chancellor’s announcement in his mini-budget that venture capital trusts (VCTs) will be extended beyond 2025.
Richard Stone, Chief Executive of the Association of Investment Companies (AIC), said: “This is a strong vote of confidence in VCTs and we applaud the government’s intention to continue the scheme beyond 2025.
“VCTs provide scale-up finance for growing businesses and are fully aligned with the government’s drive for growth, creating jobs, funding innovation and boosting exports. We look forward to clarification of how the government will remove the existing uncertainty surrounding the scheme.”
The AIC has been seeking the removal of the so-called ‘sunset clause’, which ends the upfront 30% income tax relief for VCT investors from 6 April 2025. This does not affect investors’ tax relief on VCT investments made before this date.
Will Fraser-Allen, Chair of the Venture Capital Trust Association (VCTA), said: “This is hugely welcome news for the whole industry and brings much needed clarity to those entrepreneurs who rely on equity capital to fuel the growth of their early-stage businesses as well as the end investors whose capital is used to such great effect. This decision reflects the positive dialogue the VCTA has had with the Treasury and other stakeholders in recent months, and recognises the crucial role the VCT and EIS schemes continue to play in supporting the UK’s funding ecosystem and growing our economy, at a time when it faces an uncertain future.”
Andrew Aldridge, Partner at Deepbridge Capital, was ‘delighted’ with the news commenting: “The new Chancellor’s overt commitment to the Enterprise Investment Scheme and Seed Enterprise Investment Scheme could well be the single most important decision he takes during his time at 11 Downing Street. These world-class propositions are fundamental to the creation of the innovative companies of tomorrow. Particularly within our specialist sectors of disruptive technology and life sciences, EIS and SEIS are key in ensuring the UK is globally recognised as one of the best places to start and scale business. Being a leading EIS and SEIS fund manager, we are naturally delighted that any shred of doubt has been removed for investors and entrepreneurs.”
Trevor Hope, CIO at Gresham House Ventures, which manages and advises the Baronsmead and Mobeus Venture capital trusts, said: “We view the announcement of the Government’s continued support for Venture Capital Trusts (‘VCTs’) schemes and value of extending them beyond 2025 as positive. This will provide long-term stability to VCTs, which currently contain over £6bn of capital and play an important role in supporting SMEs, bringing benefits in terms of employment and economic growth around the UK.
“We look forward to hearing further detail on the policies in today’s statement and remain enthusiastic to continue discussions with the Government to ensure VCTs can continue to support promising UK businesses.”
Nick Morgan, Partner at Foresight comments: “We welcome the announcement by the Chancellor this morning that the VCT and EIS schemes are to be extended beyond 2025. This will remove uncertainty on the future of these important schemes not only for our investors and their financial advisers, but also for the entrepreneurs and smaller companies who drive growth in the economy with significant help from these schemes.
“This recognition of the hugely important role that VCT and EIS investments play in supporting early-stage businesses will have a positive impact on market sentiment, and allow companies continued access to the all-important equity finance they need to achieve their goals.”
John Glencross, CEO and Co-Founder of Calculus Capital, said: “It’s the most supportive budget for entrepreneurs in over a generation. The speed with which the Chancellor has moved to reaffirm the continuation of the Enterprise Investment Scheme (EIS) and Venture Capital Trusts (VCTs) shows strong support for the innovators and gamechangers who can grow and scale the UK’s businesses of the future. This focus should enable more investors to continue to gain access to the diversified, strong performing and tax efficient nature of VCTs and the EIS in the future.
“Calculus launched the first approved EIS fund in 1999/2000, which gives the firm over 20 invaluable years of experience, and we are determined to continue supporting UK companies in the fastest growing sectors as well as providing innovative and tax efficient venture capital investment products for investors.”