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EIS, SEIS and VCTs – Investing in Enterprise

For over twenty years, Enterprise Investment Schemes (EIS) and Venture Capital Trusts (VCTs) have supported the growth engine of the British economy: smaller companies.

They are also one of the few areas of investment where government willingly offers generous tax reliefs, both on the initial investment and on the proceeds of qualifying investments.

Seed Enterprise Investment Schemes (SEIS) were launched in April 2012 to further this initiative by specifically providing start ups with an opportunity to raise funds.

EIS

Since the EIS was launched in 1993, £18 billion has been invested in 27,905 companies. £1.797 billion was raised for 3,470 companies in 2016/17, whilst this was lower than the previous year of £1.954 billion across 3,545 companies it included 1,490 new companies registering for EIS which raised a total of £768 million showing there is very much still a demand for this type of funding. In 2016/17, 2,260 companies received £175 million of funding from Seed EIS, which offers initial tax reliefs of up to 64%.

VCTs

VCTs were introduced in 1995 and have raised almost £7.7 billion of funds. In 2017/18 VCTs issued shares of £745 million, a 30% increase from 2016/17 and the highest amount since 2005/6. There are currently 70 VCT funds with 43 of these raising new funds in 2017/18 up from just 38 in 2016/17.

Venture capital trusts in 90 seconds



What are the benefits of investing?

In an environment where more and more people are finding access to pensions restricted by the lifetime and tapered annual allowances, VCTs offer an excellent alternative, whilst EIS provide a generous cocktail of tax reliefs. However, with so many companies and funds to choose from, many of which are exceptionally high risk, at Mattioli Woods we take great care to recommend EIS, SEIS and VCTs that are appropriate to the needs of our clients.

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