Enterprise Investment Scheme Expansion Cleared In The UK

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Enterprise Investment Scheme Expansion Cleared In The UK

Wednesday, September 28, 2011

It emerged this week that the European Commission has cleared an expansion to the Enterprise Investment Scheme (EIS) benefits for investors in the UK, first announced by Chancellor George Osborne in his March budget.

Following EU approval, the tax relief permitted for investors in the start-up stages of a small, high growth business (often known as 'angel investors') will be increased from 20% to 30% (with this measure retroactive to April 2011), and the annual limit on investment is being increased from GBP500,000 to GBP1mn, from April 2012.

According to government estimates, the expansion of the benefits afforded by the EIS, which was first put in place in the 1990s, is expected to cost in the region of GBP100mn extra per year.

However, the Chancellor was quoted in the national media this week as justifying the move from a growth-boosting point of view, explaining that:

“We want to make the UK the best place to start, finance and grow a business. These changes will give a bigger tax break to those who take risks for growth and jobs in Britain.”