Venture capital trusts and enterprise investment schemes have been given a boost in a bid to make them more attractive to investors by cutting the minimum holding period.
Tax reliefs available via VCTs and EISs are on condition that the investor remains the beneficial owner of the shares for five years.
But the minimum holding period to qualify for income tax relief has now been reduced to three years.
The industry has welcomed the news and says it should broaden the appeal of the schemes, which have already increased in popularity in the last few years.
Matrix Securities product development director Bridget Cleverly says: "It came as a surprise but the move makes them more attractive because investors are locked in for a shorter period."
Other changes to the schemes include safeguarding VCT investors' tax
reliefs where a company which the VCT has invested in is sold, merges or undergoes a capital reconstruction and the VCT receives shares rather than cash.
Murray Johnstone VCT fund manager John Simpson says: "The changes will broaden their appeal in the first instance although investors should not lose sight that investments are for the long term. But there are also a number of changes to their operational side which we have lobbied for and it is pleasing to see the Treasury has listened to the industry's representations."
