Autumn Budget: Govt doubles EIS limits on certain investments

MM-AutumnBudgetBannerChancellor Philip Hammond has announced that EIS investment limits will be doubled for certain companies in today’s Autumn Budget, while also ensuring the scheme is not used as a shelter for risk-free assets.

The current maximum investment limit eligible for tax relief is £1m.

Hammond says the new limit will apply for “knowledge-intensive” companies. There had been concerns prior to the budget that tax advantages for EIS would be reduced.

Companies qualify for the EIS scheme if they’ve been trading for at least four months and have no more than £15m in gross assets and fewer than 250 employees or 500 employees in certain conditions.

It is one of four schemes designed to help small or medium sized companies and social enterprises grow by attracting investment, with the SEIS available for smaller companies with less than £200,000 gross assets and fewer than 25 employees.

VCTs, another scheme, have also come under fire in today’s budget. Social Investment Tax Relief (SITR) is the remaining venture capital scheme, which applies to charities and SMEs with a social or community benefit.

Currently EIS investments get 30 per cent income tax relief and are capital gains free if held for at least three years.

An estimated £15.9bn has been invested in the schemes since the EIS was launched in 1994.

First Wealth advisers Claire Phillips says: “The doubling of the EIS allowance will be welcome by companies who benefit from their funding, helping UK businesses grow, generating income and jobs.  It will be a welcome boost to those wealthier people who will benefit from the 30 per cent up front tax relief.  It remains to see what Mr Hammond meant by not being seen as a ‘safe haven’ and the criteria for ‘knowledge intensive businesses’.

“Overall a positive note for the economy and to the commitment to the technological revolution.”

Click here for all our latest coverage on the Autumn Budget.

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