Treasury confirms extension of the Enterprise Investment Scheme (EIS) and Venture Capital Trust (VCT) tax reliefs to April 2035

Treasury confirms extension of the Enterprise Investment Scheme (EIS) and Venture Capital Trust (VCT) tax reliefs to April 2035

The above-mentioned schemes will now run until 5 April 2035 and are designed to encourage investment into new or young companies through tax-relief incentives, encouraging innovation, creating jobs and stimulating economic growth.

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

The EIS offers tax relief to individuals that invest in new shares in qualifying companies with investors able to invest up to £1m, or £2m if the shares are in knowledge-intensive companies, which focus on research and development (R&D). Shares must be held for a minimum of two years.

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 with dividends paid tax-free.

The extension which was announced in a written ministerial statement is expected to provide the confidence to continue investment into high-risk, early-stage businesses in the UK, supporting long-term growth and the development of companies.

The Exchequer secretary to the Treasury 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 is now in force after the regulations were updated through a statutory instrument under Finance Act 2024, Section 11 (Extension of Enterprise Investment Scheme Relief and Venture Capital Trusts Relief) (Appointed Day) Regulations 2024 (SI 2024/897).