The annual allowance for people investing in knowledge-intensive companies through the Enterprise Investment Scheme (EIS) is to double, Chancellor Philip Hammond has confirmed in the Budget
As part of the move, the annual investment those companies can receive through EIS and the Venture Capital Trust (VCT) scheme will also double.
Under the plans, the annual limit for individuals investing in knowledge-intensive companies under the EIS will be increased to £2m, provided that anything above £1m is invested in knowledge-intensive companies.
The annual EIS and VCT limit on the amount of tax-advantaged investments a knowledge-intensive company may receive will be increased to £10m. Greater flexibility will be provided with respect to the rules for determining whether a knowledge-intensive company meets the permitted maximum age requirement.
Both changes will apply from 6 April 2018 and introduced in Finance Bill 2017-18.
The government expects the move to have no impact on the Exchequer in 2018-19, and expects to initially gain £45m in 2019-20, with £35m coming in during 2020-21. It expects the move to cost it £15m in 2021-22 and £20m in 2022-23, with a net gain of £45m by the end of the parliament.
Implementing the changes is expected to incur operational costs for HMRC of approximately £700,000 for updating the self-assessment form SA101 for individuals who claim for EIS investments higher than £1m.
The policy paper is available here.
Report by Calum Fuller
