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EIS and VCT schemes successful in boosting companies

Enterprise Investment Schemes and Venture Capital Trusts have largely met their objectives since their introduction, according to a report commissioned by the Inland Revenue as part of this week&#39s Budget.
The study by the Public and Corporate Economic Consultants found that the EIS and VCT schemes – introduced in 1994 and 1995 respectively – have provided investors with reasonable rates of return as well as front end income tax relief.
Though the study found some disgruntled investors, especially with EIS schemes, more than two-thirds said they would consider making the same investment again.
The study also found the schemes met their objectives in terms of boosting the growth of the companies in which they invest. Almost half of EIS companies and nearly 40 per cent of VCT firms said the schemes enabled them to attract investors or fund managers who provided them with business advice and expertise.
The report says: “Despite the differences between the schemes in terms of the ways firms used the finance raised, the effect of the VCT scheme on company performance was not greatly different from the effect of the EIS.”
Hargreaves Lansdown investment manager Ben Yearsley says: “It&#39s good news. Maybe this could go some way towards widening the markets and getting IFAs interested.”

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