Tax Relief for Investment Entrepreneurial Companies
23rd November 2017
The Chancellor announced in his speech that restrictions would be imposed on 'less risky' investments in EIS/SEIS companies and VCTs and the detail published yesterday reveals that a new 'risk to capital condition' is to be introduced for investments made after 5 April 2018. We will have to wait for the detail as the information available so far only vaguely refers to a requirement for 'entrepreneurial objectives to grow and develop' and a 'significant risk of loss of capital' for the investor.
This will mean that businesses seeking investment will need to consider whether this should be accelerated into this tax year, and investors will also have to bear it in mind.
The other more positive headline for EIS and VCT was the doubling of the annual amount which individuals can invest from 2018/19 from £1m to £2m, although the extra £1m must be invested in 'knowledge - intensive companies' which are smaller companies developing IP for their own use. The annual amount which these companies can receive has also been doubled, from £5m to £10m, from 6 April 2018.
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Author: Peter Hedgethorne, Director