As Britain prepares for Brexit, tax-efficient investment schemes are vital

28th April 2017

Britain has entered an era of profound transformation as it prepares to leave the European Union and forge its own independent identity, backed by a private sector globally renowned for its innovation and growth. For investors, Britain’s thriving community of scaling SMEs offers significant investment opportunities that will support the rise of Brand Britain over the coming 24 months.

Tax-efficient investment opportunities are proving to be a particularly popular destination for British investors seeking to support UK SMEs. This week, newly released figures from HMRC have revealed the huge number of investors and SMEs that have turned to the Enterprise Investment Scheme (EIS).

Since its launch in 1993/94, over 26,000 individual companies have raised £15.9 billion through the EIS. In 2015/16 alone, a total of £1,647 million of funds were raised through to scheme to support 3,285 companies. These revised figures correlate with recent research by IW Capital, which revealed that 3.19 million Brits feel the biggest investment opportunity in 2017 lies in private equity investment.

CEO of IW Capital, Luke Davis, is currently being featured in the Financial Times offering his thoughts on what these revised figures mean for the future of EIS in supporting scaling businesses and investors. You can access the article here.

As part of the Brexit process, the British Government is scheduled to introduce the ‘Great Repeal’ bill over the coming months as a means of reviewing and repealing current European legislation that the UK is bound to. Since 2015, the imposition of European State aid regulations has restricted the number of investors and scaling businesses able to access tax-efficient investment schemes like EIS. The tightening of eligibility criteria has limited the number of companies that are able to raise funds through the scheme, and funding caps mean that only a certain amount of finance can be raised.

Recently, Luke Davis was featured in Fund Strategy arguing why Brexit and the ‘Great Repeal Bill’ give the Government a vital opening to review the current legislative framework underpinning tax-efficient investment schemes – in turn they can deliver a reformed system that caters to the demands of investors and businesses. These revised figures demonstrate the market appetite for EIS is consistently strong, and the Government must look to tax-efficient investment schemes as a means of catalysing private sector growth in the important period that lies ahead.

To find out how EIS can support your financial strategy in 2017, download an IW Capital brochure here.