Budget 2018: new EIS fund structure

15th November 2018

EIS fund structure

On 29th October, in the final Budget pre-Brexit, the Government announced a new EIS fund structure designed to focus primarily on knowledge-intensive SMEs. SMEs – Small and Medium Enterprises – make up 99% of private sector businesses and employ 16.1 million people nationwide. These small businesses form the backbone of the UK economy and moving forward, knowledge-intensive small businesses will become increasingly important and this new fund reflects that.

The new fund structure will provide tax incentives for investors in the knowledge-intensive SME arena, with 80% of funds raised being required to be invested into knowledge intensive qualifying companies, including Fintech and other businesses that invest heavily in research and development. The structure will also give companies that have raised funds this way more time with a limit of two years to invest the funds with 50% to be used in the first year.

Luke Davis, CEO of IW Capital, commented on this news and what it means for the SME sector: “The Budget brought about a range of SME facing initiatives that we welcome; the entrepreneurs of the UK needed some assurance pre-Brexit, and though not extensive in terms of infrastructural changes to the investment arena, the additional knowledge intensive fund is great news. With such upheaval in both the political and economic landscapes, it’s vital that high-growth companies are protected all the way.

Our private sector is almost unrecognisable from the one of even five years ago, with the tech sector valued at £184 billion and growing at a rate 2.6x faster than all other sectors, the advancements to EIS needed to catch up with this change. Boosting investment into knowledge-intensive companies that already set the benchmark standard, whilst still protecting the vital community of small businesses driving more traditional sectors forward is key. This move will help secure the future of government-backed investment into the UK’s small businesses, securing a junior private sector that’s Brexit resilient and ready for a global stage.”

IW Capital is keen to help SMEs that need assistance to plan for the future and find the right kind of investment in order to help them reach the next level. If you are interested in investment in knowledge-intensive SMEs or finding more information about EIS itself, get in contact with IW Capital to see how we can help you.