Autumn Statement 2023: Enterprise Investment Scheme and Venture Capital Trusts scheme extension

The Enterprise Investment Scheme (EIS) and Venture Capital Trust (VCT) scheme aim to attract funding for early-stage companies by offering generous tax relief to individual investors. Broadly, qualifying investments can access 30% income tax relief and a capital gains tax exemption on the sale of the shares invested in.

The government recently undertook an evaluation of the EIS and VCT scheme which found that the EIS and VCT scheme successfully incentivised additional investment. In particular,  the EIS was successful in targeting investment in new, innovative start-ups and had a positive impact on growth e.g. higher levels of turnover, assets and employment.

Unfortunately, the EIS and VCT scheme were both subject to ‘sunset’ clauses which would limit Income Tax relief under them to shares issued before 6 April 2025.

On the back of the recent evaluation the government has, however, stated its continuing commitment to the EIS and VCT scheme and announced that it will legislate to extend those sunset clauses to 6 April 2035, thereby continuing the availability of Income Tax relief for investors in qualifying EIS companies and VCTs.