UK Enterprise Investment Scheme (EIS) – budget changes
In my blog post earlier this year I explained the importance of the UK Government’s EIS scheme to UK angel investments. In the recent budget some changes to the scheme were made which further increases its attractiveness to angel investors. The most important of these is that tax relief has grown from 20% to 30% of the sum invested – this is hugely significant and means if you’re trying to raise money from UK angels you really must ensure that you can qualify for EIS relief.
There are some more detailed changes and these have been identified by Baker Tilly accountants (an excellent firm in my experience by the way) in their summary of the budget changes, which I repeat below:
“Investors under the EIS are entitled to upfront income tax relief of up to 20% of the amount invested. From 6 April 2011 the available relief will increase to 30% of the amount invested.
Currently an individual can invest up to £500,000 under the scheme – from 6 April 2012 this limit doubles to £1 million.
To qualify for investment under the EIS or from VCTs a company must have fewer than 50 employees and its gross assets must not exceed £7 million immediately before, or £8 million immediately after the investment. These restrictions are to be changed (for investments made on or after 6 April 2012) to a requirement to have fewer than 250 employees and gross assets of no more than £15 million immediately before the investment.
Companies are currently only able to raise up to £2 million in any 12 month period under the EIS or from VCTs. From 6 April 2012 this annual limit increases by 400% to £10 million.
All the above changes are subject to EU State Aid approval.”