Venture capital tax relief: where are we now?
It’s all about providing early stage finance to new, higher-risk companies, and rewarding individual
investors with generous tax relief for doing so. The venture capital schemes were envisaged as
time-limited, and given sunset clauses in the legislation. But the position is now changing.
The schemes comprise the Enterprise Investment Scheme (EIS), Seed Enterprise Investment Scheme (SEIS),
Social Investment Tax Relief (SITR) and Venture Capital Trusts (VCTs). The EIS and VCT
schemes were due to expire by 6 April 2025. Instead, they have been given a longer lease of life, and
in some areas, made wider in scope.
Details to note are as follows:
- SEIS benefits from increased limits from April 2023. These include increasing the amount companies
can raise in SEIS investment to £250,000, and doubling the annual investor limit to £200,000. The limit
on the age of the company’s qualifying trade increases from two years to three, and the gross asset
limit also increases, from £200,000 to £350,000.
- EIS and VCT schemes will now be available beyond 6 April 2025, though it is
not yet clear whether a further sunset clause will apply.
- SITR is due to finish in April 2023.
- new admin: there is a new online Government Gateway service for companies to apply for advance
assurance on a venture capital scheme. This is to be used for all schemes except SITR. SITR
applications should still be made by email or post, with a covering letter and supporting documentation
submitted. Advance assurance involves a company providing HMRC with detailed information so that it can
give an opinion on its eligibility to use a venture capital scheme. If advance assurance is given, HMRC
will send a statement saying the investment is likely to qualify: this can then be shown to potential
Working with you
Navigating the venture capital scheme rules demands a high level of precision: shares, company and
investor must all meet specific criteria for tax relief to be available. Whether you are a business
interested in raising external finance, or an individual looking for tax-efficient investment, we
should welcome the opportunity to look at the various options with you.
Got a question?
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