EIS crackdown ‘would spell disaster’
The Treasury is looking to crackdown on Enterprise Investment Schemes (EIS), likely to be announced in the next Budget on November 22.
The scheme allows people to invest in start-ups, either directly or through funds, and provides handsome tax breaks for doing so.
The Treasury is understood to be considering a crackdown on what it regards as abuses of the Enterprise Investment Scheme. This could include reductions in the level of tax relief available, increasing the period investments must be held for and tougher restrictions on qualifying businesses.
These new restrictions are not supported by investors who fear the effect this will have on start up businesses. “Curtailing a scheme that promotes the backing of businesses in their early stages would have a “disastrous” impact on entrepreneurs’ ability to secure growth finance”, investors have warned.
The EIS requirements were previously restricted by government back in 2015. Currently, only companies with assets under £15 million qualify for EIS funding, and they can only receive a maximum of £5 million a year in investment.
The Credit Protection Association says “SME’s are the lifeblood of our economy and taking away incentives for investors and entrepreneurs to support new start ups is a bizarre move”
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