The Chancellor announced today (23 September 2023) in the UK Growth Plan, changes to be made to SEIS, EIS and VCT that will come into affect in April 2023.
These changes will focus on growth and the future of UK economic success by ensuring the future of the EIS and VCT schemes.
EIS and VCT Sunset Provisions
Since the 1990s, successive UK governments have backed venture capital tax reliefs (Enterprise Investment Scheme (EIS) and Venture Capital Trust (VCT) scheme), which have helped numerous startups, scaleups and small enterprises.
Before today's announcement, only shares issued on or before 5 April 2025 would have qualified for the upfront income tax relief under the EIS and VCT schemes. In today's annoucement, the Chancellor has confirmed that the sunset provisions for EIS and VCTs will be extended beyond 2025.
SEIS Changes
The Seed Enterprise Investment Scheme (SEIS) is a government initiative to encourage high risk seed stage funding for early stage startups. Investing via the SEIS scheme, investors benefit from various tax reliefs. SEIS was set up in 2012 to stimulate growth in the economy and has been very successful to date. The changes that will come into affect in 2023 will boost this further.
From April 2023, startups will be able to raise £250,000 under the scheme (rather than the current £150,000), a 66% increase. In order to enable more startups to utilise SEIS, the gross asset limit will be increased to £350,000 and the age/trading limit will be increased from 2 to 3 years. Further, the annual personal allowance investor limit will double from £100,000 to to £200,000.
If you are interested in how these schemes can help please get in touch.