PRESS RELEASE : Boost for UK growth as start-up investment schemes extended [September 2024]

The press release issued by HM Treasury on 4 September 2024.

The Enterprise Investment Scheme (EIS) and the Venture Capital Trust (VCT) scheme have now been extended by ten years to 5 April 2035.

• Government extends two leading investment schemes 10 years from April 2025 to April 2035 as part of its relentless pursuit of growth.
• Extensions will support start-ups and entrepreneurs to help them grow and rebuild Britain.
• The change will build on over £41 billion of investment generated over 30 years.

Thousands of entrepreneurs and start-ups are set to benefit from the extension of two leading government investment schemes to help them grow the economy and rebuild Britain.

The Enterprise Investment Scheme (EIS) and the Venture Capital Trust (VCT) scheme were both set to end on 6 April 2025 and have now been extended by ten years to 5 April 2035.

The schemes are designed to encourage investment into new or young companies through tax-relief incentives, encouraging innovation, creating jobs and stimulating economic growth.

The government is fully focused on restoring economic stability, taking the tough decisions to fix the foundations of our economy, rebuild Britain and make every part of our country better off.

Exchequer Secretary to the Treasury, James Murray, said:

“Startups 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 via a Written Ministerial Statement today in the House of Commons, will provide the confidence to continue investment into high-risk, early-stage businesses in the UK, supporting long-term growth and the development of their trades.

Industry leaders have praised the announcement.

BVCA Chief Executive Michael Moore said:

“It is excellent news that the government is moving so quickly. This means that investors can now focus on what they do best, investing, safe in the knowledge that these schemes now have the long-term security needed to drive investor confidence.

“The BVCA has long advocated for this move as these schemes play a vital role in supporting early-stage companies that have the highest growth potential and crowding in further investment through the growth cycle.

“As the third largest VC market in the world, the UK has proven the success of EIS and VCT, and with many jurisdictions now following our lead, it is vital that the UK retains its competitive edge in a competitive world and this move is a very positive step in that direction.”

Richard Stone, Chief Executive of the Association of Investment Companies, said:

“VCTs invest in the UK’s most exciting early-stage companies. They help entrepreneurs transform their businesses. Extending the VCT scheme until 2035 will allow the sector to raise further capital and invest with confidence. This will ensure VCTs can help the government secure its ambitions to grow the economy, support innovation and create jobs.”

Both schemes offer incentives to investors of up to 30% upfront income tax relief and an exemption from capital gains tax on any profits made after the sale of shares.

The EIS, introduced in 1994, offers tax relief to individuals that invest in new shares in qualifying companies with investors able to invest up to £1 million, or £2 million if the shares are in knowledge-intensive companies, which focus on research and development.

The government recognises the risk that investment in early-stage companies carries, so investors are offered loss relief through the EIS as long as shares are held for at least two years.

First introduced in 1995, VCTs are companies listed on the UK’s stock exchange that invest in early-stage trading companies on behalf of people, enabling individuals to invest up to £200,000 per year in new VCT shares. Dividends received from VCT’s are also tax-free.

Both schemes have already seen significant success with over £41 billion raised through the schemes since the EIS was launched in 1994. The schemes continue to generate vast amounts of investment, with £2.9 billion of funds raised across the schemes in 2022-23 and 1,280 companies using the EIS for the first time over this period.

The Treasury has made regulations to bring this into effect which have come into force.