People need to be aware of changes to tax efficient schemes

Date: 01/04/15

People need to be aware of changes to tax efficient schemes

Individuals are reminded that a number of tax-efficient investment schemes will be changing soon.

The reminder comes after the Chancellor, George Osborne, announced a number of changes to venture capital trusts (VCT) and enterprise investment schemes (EIS) during this year’s Budget.

Under the reforms, EIS or VCT investment will be made subject to state aid rules and will require firms to be less than 12 years old when receiving their first funding from investors, except where the investment would lead to a substantial change in the firm’s activity, or where the total investment represents more than 50 per cent of turnover averaged over the preceding five years.

The Budget also included a £15 m cap on total investment received under tax-advantaged venture capital schemes, which increases to £20m for knowledge-intensive businesses that have up to 499 employees.

The new rules also remove the requirement that 70 per cent of seed enterprise investment scheme (SEIS) money must be spent before EIS or VCT funding can be raised, while firms who have benefitted from substantial subsidies for renewable energies will be excluded from receiving funding from EIS, VCT or SEIS investment.

The Budget has had a very mixed response from businesses up and down the country and this is certainly one thing that may cause concern for some individuals.

UK businesses and investors have both greatly benefited from EIS, VCT and SEIS schemes, but these new rules will complicate the matter for many and cause concern among firms who hoped to get funding, but who may now not be able to receive it.

Anyone who is worried about what the changes will mean for them, their investment or business should contact a professional who can put their affairs in order.

The legislation will not be retrospective so it will not affect existing investments in VCTs and EIS and will be implemented from the date of state aid clearance.

For more information please contact Stuart Hinnigan at the office.

Stuart Hinnigan FCA CTA

Author: Stuart Hinnigan FCA CTA

Stuart’s career in accountancy began when he joined Preston based Moore and Smalley in 1994 following his graduation from Lancaster University. He qualified as a Chartered Accountant in 1997 and then chose to specialise in...

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