The UK government has announced a ten-year extension for the Enterprise Investment Scheme (EIS) and the Venture Capital Trust (VCT) scheme, which will run until 5 April 2035. This move aims to support start-ups and entrepreneurs in driving economic growth and rebuilding Britain.
Initially set to expire on 6 April 2025, both schemes are designed to incentivise investment in early-stage companies through tax reliefs.
The EIS, introduced in 1994, offers up to 30% upfront income tax relief and an exemption from capital gains tax on profits from shares. Investors can contribute up to GBP 1 million annually, or GBP 2 million for knowledge-intensive companies focused on R&D. Similarly, the VCT scheme, established in 1995, allows investments of up to GBP 200,000 per year with tax-free dividends.
The government’s extension builds on over GBP 41 billion invested through these schemes over the past 30 years.
Exchequer Secretary to the Treasury, James Murray, stated, “Start-ups and entrepreneurs are a driving force for greater investment, more jobs, and economic growth in the UK. By extending these schemes for 10 years, we are providing the stability and support they need to help us make every part of Britain better off.”
The extension, announced in a Written Ministerial Statement in the House of Commons, is expected to boost confidence in high-risk, early-stage investments, fostering long-term growth and business development.
Industry leaders have welcomed the decision. BVCA Chief Executive Michael Moore praised the quick action, noting that it will enhance investor confidence and maintain the UK’s competitive edge in the global venture capital market.
Richard Stone, Chief Executive of the Association of Investment Companies, highlighted that the extension will enable VCTs to raise more capital and support the government’s economic growth and innovation goals.
The Treasury has made regulations to bring this into effect, which have come into force.